Banque du Liban: The Role and Evolution of Lebanon's Central Bank
The Banque du Liban (BdL), known in English as the Bank of Lebanon, serves as the central monetary authority of the Lebanese Republic. Established on August 1, 1963, and becoming fully operational on April 1, 1964, the bank is a legal public entity with financial and administrative autonomy. Headquartered in Beirut, it is 100% state-owned and plays a pivotal role in managing one of the most banking-centric economies in the region.
Beyond traditional monetary policy, the BdL holds unique assets and responsibilities. It owns 99.37% of Middle East Airlines, the national carrier, and is the dominant shareholder of the Intra Investment Company (IIC), which owns 53% of Casino du Liban. This makes the BdL the only central bank in the world to hold a controlling interest in a Las Vegas-style gambling casino.
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Key Facts
- Established: August 1, 1963.
- Currency: Lebanese pound (LBP).
- Current Governor: Karim A. Souaid (as of March 2025).
- Reserves: $14.7 billion.
- Bank Rate: 2.75%.
- Ownership: 100% state-owned.
Historical Background
The monetary history of Lebanon is deeply intertwined with its transition from Ottoman rule. Following the end of Ottoman domination on October 6, 1918, the Turkish Treasury's paper money was phased out. Initially, British authorities introduced banknotes from the National Bank of Egypt to stabilize the economy, as the Egyptian currency was closely linked to sterling.
By 1919, French authority replaced the British under General Gouraud. Due to the fluctuating value of the French franc and the need for a local currency, the French government issued Decree N° 129 on March 13, 1920, to establish a national currency for Syria. This led to the creation of the Banque de Syrie et Liban, which was granted the concession to issue the Syrian–Lebanese currency, becoming legal tender on May 1, 1920.
Role and Functions
The Banque du Liban operates under the Code of Money and Credit. Its primary mandate is to ensure the stability of the Lebanese economy through several core functions:
- Currency Issuance: The sole authority for issuing the Lebanese Pound (LBP).
- Monetary Stability: Implementing policies to maintain the value and stability of the currency.
- Banking Regulation: Overseeing the soundness of the banking sector, which comprises over 100 different banks.
- Transfer Regulation: Managing and regulating the flow of money transfers.
The Higher Banking Commission
Established in 1967, the Higher Banking Commission ensures rigorous oversight of the financial sector. It is chaired by the Governor of the BdL and includes a vice-governor, the Director General of the Ministry of Finance, a representative from the Association of Banks in Lebanon, and the chairman of the National Deposit Guarantee Institution (NDGI).
Governance and Leadership
The bank is managed by a Governor, supported by four vice-governors and the Central Council. By long-standing convention, the Governor is always a Maronite Christian.
| Governor | Term Start | Term End | Key Notes |
|---|---|---|---|
| Philippe Takla | Aug 28, 1963 | Jun 6, 1967 | First Governor of BdL |
| Elias Sarkis | Jun 7, 1967 | Jun 2, 1976 | Later served as 6th President of Lebanon |
| Riad Salamé | Jun 7, 1993 | Jul 31, 2023 | Longest serving; subject to international sanctions |
| Karim A. Souaid | Mar 27, 2025 | Incumbent | Financial expert and private equity investor |
Innovation and Startup Support
In an effort to pivot toward a knowledge economy, the BdL introduced Circular No. 331 on August 22, 2013. This policy encourages commercial banks to invest in startups by providing a BDL guarantee of up to 75% of the investment value. The goal is to reduce unemployment and establish Lebanon as a regional tech hub.
Notable beneficiaries and partners of this ecosystem include Berytech, a business development center; Kashida, a 3D Arabic design firm; and the UK Lebanon Tech Hub, a joint initiative between the BdL and the UK government.
Controversies and Misconduct Allegations
The tenure of former governor Riad Salameh was marked by significant controversy. A forensic audit covering 2015–2020 revealed $111 million in "illegitimate commissions" and criticized the bank's use of financial engineering. This practice involved attracting dollar deposits from abroad with high interest rates to mask losses, which the audit estimated at $76 billion.
As a result, the United States, United Kingdom, and Canada imposed sanctions on Salameh and his associates. Furthermore, on July 14, 2025, the BdL issued a circular prohibiting all licensed financial institutions from dealing with Al-Qard Al-Hassan, the financial arm of Hezbollah, citing international pressure and sanctions.
Frequently Asked Questions
What is the primary responsibility of the Banque du Liban?
The primary responsibilities include issuing the Lebanese Pound, maintaining monetary stability, regulating money transfers, and ensuring the soundness of Lebanon's banking sector.
What is Circular No. 331?
Circular No. 331 is an investment policy launched in 2013 to support the startup ecosystem. It encourages commercial banks to invest in tech startups by guaranteeing up to 75% of the investment value.
Who is the current Governor of the Banque du Liban?
As of March 2025, the Governor is Karim A. Souaid, a financial expert and banking governance specialist.
Why was Riad Salameh sanctioned?
Riad Salameh was sanctioned by the US, UK, and Canada following allegations of corruption, money laundering, and illicit enrichment, as well as findings from a forensic audit regarding "illegitimate commissions."
Does the Banque du Liban own any non-banking assets?
Yes, the BdL owns 99.37% of Middle East Airlines and holds a dominant share in the Intra Investment Company, which in turn owns 53% of Casino du Liban.