Issuance of Certificates of Deposit by Banque du Liban

375

Text/Section 1, Circular 67, Date: 2024-12-31

Basic Circular No. 67 Also addressed to financial institutions

We enclose a copy of Basic Decision No. 7534 dated March 2, 2000, concerning the issuance of bank certificates of deposit by Banque du Liban.

Beirut, March 2, 2000 Governor of Banque du Liban Riad T. Salamé Old No. 1802

376

Basic Decision No. 7534

Whereas the Governor of Banque du Liban, pursuant to the Monetary and Credit Law, particularly Articles 70, 76 (paragraph w), and 81 (paragraph 6) thereof, and based on the approval of the Central Council in its session held on March 1, 2000,

decides as follows:

Article 1: Banks and resident and non-resident financial institutions may apply to the Head Office of Banque du Liban for bank certificates of deposit against their free deposits held in Lebanese Lira, US Dollars, or Euros, provided that the nominal value of each certificate of deposit is not less than one billion Lebanese Lira for the Lebanese currency, one hundred thousand US Dollars for the American currency, and one hundred thousand Euros for the European single currency.

Article 2: Bank certificates of deposit may be registered, order, or bearer instruments.

Article 3: A bank certificate of deposit must explicitly and visibly state that trading in it is restricted to banks and resident and non-resident financial institutions.

Article 4: Resident banks may request Banque du Liban to issue bank certificates of deposit under the provisions of this decision, on behalf of non-resident banks and financial institutions, subject to the following conditions:

1. The source of funds must be foreign currency deposits converted into Lebanese Lira specifically for this purpose. 1- This article was amended by Article 1 of Interim Decision No. 8947 dated January 11, 2005 (Interim Circular No. 79).
2. The Monetary Operations Directorate of Banque du Liban must be notified of the names of non-resident banks and financial institutions intending to obtain bank certificates of deposit against their Lebanese Lira deposits held at the Bank, and must obtain its prior approval regarding the acceptance of such deposit and its volume.

Article 4 bis: Banks and resident financial institutions may, in execution of credit operations and after the prior approval of Banque du Liban's Central Council, obtain bank certificates of deposit issued under this decision on behalf of their clients, provided that these certificates are:

• 1. Registered or order instruments in the name of the concerned bank or financial institution, acting as trustee under Law No. 520 dated June 6, 1996 on the Development of the Financial Market and Credit Contracts;
• 2. Non-transferable or endorsable only to resident and non-resident banks and financial institutions.

378

Article 5: Non-resident banks and financial institutions may directly request Banque du Liban to obtain bank certificates of deposit against their free deposits held in US Dollars, Euros, or Lebanese Lira, provided that, in the latter case, the condition stipulated in paragraph (1) of Article 4 of this decision is met.

Article 6: Banque du Liban determines the total volume of issued certificates of deposit, their maturities, and interest rates. 1- This article was added by Interim Decision No. 8372 dated April 14, 2003 (Interim Circular No. 31), and subsequently amended by Article 1 of Interim Decision No. 8834 dated September 6, 2004 (Interim Circular No. 66). 2- This article was amended by Article 2 of Interim Decision No. 8947 dated January 11, 2005 (Interim Circular No. 79).

Article 6 bis: Interest on foreign currency certificates of deposit issued by Banque du Liban and held by banks operating in Lebanon is reduced by 90% and paid in the same currency into the current account of the concerned bank at Banque du Liban, excluding "cash funds".

Article 7: Resident and non-resident banks and financial institutions may not rediscount certificates of deposit issued under this decision at Banque du Liban.

Article 8: The provisions of Articles 8, 10, and 12 of Basic Decision No. 7224 dated February 11, 1999 (attached to Basic Circular No. 61 dated February 11, 1999 addressed to banks, financial institutions, and supervisory commissioners) apply to bank certificates of deposit issued under this decision. The concerned banks and financial institutions may request Banque du Liban to apply rules different from those stipulated in Articles 8, 10, and 12 of Basic Decision No. 7224 mentioned above regarding bank certificates of deposit obtained for marketing purposes abroad. 1- This article was added by Interim Decision No. 13157 dated December 4, 2019 (Interim Circular No. 536), and the latest amendment was introduced by Article 2 of Interim Decision No. 13789 dated December 30, 2025 (Interim Circular No. 749), effective as of January 1, 2026. 2- This article was amended by Article 1 of Interim Decision No. 9028 dated May 18, 2005 (Interim Circular No. 83). 3- This number is according to the old numbering system.

Article 9: Decision No. 5726 dated November 8, 1994 (attached to Circular No. 3 for banks and financial institutions No. 1297 dated November 8, 1994) is repealed.

Article 10: This decision takes effect upon its issuance.

Article 11: This decision shall be published in the Official Gazette. Beirut, March 2, 2000 Governor of Banque du Liban Riad T. Salamé