Investment of Banks in Foreign Currencies at BDL

593 Text/ Section / 1 R / 86 T / 2025-12-31

Basic Circular for Banks No. 86

We enclose a copy of Basic Decision No. 7926 dated 20/9/2001 concerning the mandatory investments of banks ^1.

Beirut, on 20 September 2001 Governor of the Banque du Liban Riad T. Salamé

^1 - The name of this decision was last amended pursuant to Article 1 of Interim Decision No. 8371 dated 31/3/2003 (Interim Circular No. 30). Old number: 1949.

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Basic Decision No. 7926

1. Mandatory Investments of Banks

The Governor of the Banque du Liban, 2. based on the Monetary and Loan Law, particularly Articles 76 (paragraph w), 77, and 174 thereof, and based on the decision of the Central Bank Council adopted in its meeting held on 19/9/2001, hereby decides as follows:

Article 1 ^3: 1 - All banks operating in Lebanon shall deposit with the Banque du Liban, in exchange for the interest paid by the latter on foreign currency time deposits held with it, a rate of 11% instead of 14% of the following foreign currency components:

• All types of deposits received, regardless of their nature.
• Debt securities, certificates of deposit, and bank certificates issued by them, as well as loans obtained from the financial sector with a remaining maturity of one year or less. 2 - The difference resulting from the reduction stipulated in paragraph (1) above shall be used exclusively by the Banque du Liban to secure the liquidity required pursuant to Basic Decision No. 13335 dated 8/6/2021 (Basic Circular No. 158) and Basic Decision No. 13611 dated 2/2/2024 (Basic Circular No. 166). 3 - The rate mentioned in this article shall be calculated according to the same periods and method used for calculating the mandatory cash reserve in Lebanese Lira, as specified in the regulatory texts issued by the Banque du Liban.

^1 - The name of this decision was last amended pursuant to Article 1 of Interim Decision No. 8371 dated 31/3/2003 (Interim Circular No. 30). ^2 - See Article 79 of the Monetary and Loan Law, which aligns with the content of this circular. ^3 - This article was last amended pursuant to Interim Decision No. 13712 dated 27/3/2025 (Interim Circular No. 731).

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Article 2 ^1: 2 - All banks operating in Lebanon shall subscribe to treasury bills issued by the Lebanese Republic in Lebanese Lira or foreign currencies in international markets (Eurobonds), or to certificates of deposit issued by the Banque du Liban without interest for a period of two years. The total subscribed bonds and certificates of deposit, as mentioned above, must represent 10% of the foreign currency deposit components available at the relevant bank as of 31/10/2002, as specified in Table (1) attached, and this shall be done in seven installments: on 17/1/2003, 18/2/2003, 18/3/2003, 18/4/2003, 16/5/2003, 1/7/2003, and 1/8/2003. 2 - The rate mentioned in paragraph (1) of this article shall be covered in cash or by previously subscribed treasury bills in Lebanese Lira or foreign currency, coordinated with the Financial Operations Directorate at the Banque du Liban and according to the rules and principles outlined in Table (2) attached. All treasury bills shall be calculated at their actual value upon mandatory investment (i.e., their par value with accrued but unearned interest). Furthermore, treasury bills issued in foreign currencies (Eurobonds) shall be calculated based on an average US dollar exchange rate of 1,507.50 L.L. or its equivalent in other foreign currencies. 3 - Banks shall provide the Financial Operations Directorate at the Banque du Liban, by no later than 15/1/2003, with a statement detailing the subscription to treasury bills referred to in paragraph (1) of this article, as shown in Table (2) attached. 4 - Treasury bills subscribed to pursuant to paragraph (1) of this article shall be included in banks' liquid funds and shall be eligible for sale and repurchase operations under the repo system at the Banque du Liban without any commission or interest.

^1 - This article was amended by Article 2 of Interim Decision No. 8312 dated 16/12/2002 (Interim Circular No. 26), which is effective for two years from its issuance date. ^2 - This paragraph was amended by Article 2 of Interim Decision No. 8371 dated 31/3/2003 (Interim Circular No. 30); its Article 3 stipulates: "The subscriptions intended to be carried out on 1/7/2003 and 1/8/2003 shall be allocated to cover the cash amounts previously committed by some banks, respectively, on 18/4/2003 and 16/5/2003."

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5 - The Central Bank Council may, in exceptional cases, approve the discounting of treasury bills subscribed to pursuant to paragraph (1) of this article without interest, after six months from the date of each issuance and periodically every six months thereafter. 6 - The application of Article 5 of Basic Decision No. 6101 dated 8/2/1996 is suspended until 31/7/2005. 7 - The provisions of this article shall apply once and until the maturity date of the treasury bills subscribed to pursuant to paragraph (1) thereof. The Central Bank Council shall review all exceptional cases that may arise from applying the provisions stipulated in this article.

Article 3: Each bank shall deposit a special minimum reserve with the Banque du Liban in a non-interest-bearing account, equivalent to the value of the reduction applied to the rates mentioned in Articles 1 and 2 above, for one month per each reduction period (two-day average).

Article 4: The Banque du Liban shall collect a penalty interest from banks that fail to comply with the special minimum reserve deposit pursuant to Article 3 of this decision, calculated according to Article 77 of the Monetary and Loan Law and relevant regulatory texts issued by the Banque du Liban.

Article 5: This decision takes effect upon its issuance.

Article 6: This decision shall be published in the Official Gazette. Beirut, on 20 September 2001 Governor of the Banque du Liban Riad T. Salamé

^1 - This paragraph was amended by Article 1 of Interim Decision No. 8943 dated 8/1/2005 (Interim Circular No. 75).

596 bis 1 Table No. (1)

Deposits subject to the 10% rate imposed by Basic Decision No. 7926

Sorting Code	Description
20500	Other registered financial institutions - Resident and non-resident
20800	Customer deposits - Resident and non-resident
-20841	Less: Savings/Housing Loan Program accounts
-20842	Less: Deposits of the Voluntary Military Housing Agency
-20873	Less: Cash guarantees for loans
20895	Less: Accrued but not yet due interest
20900	Public sector deposits - Resident and non-resident
-20980	Less: Accrued but not yet due interest
21000	Payment values - For residents and non-residents
21210	Various creditors, private sector - Residents and non-residents
21300	Partners - Residents and non-residents
-21311	Less: Cash guarantees for loans
-21325	Less: Accrued but not yet due interest
-21330	Less: Frozen deposit to cover reserve shortfalls
23000	Branches abroad
23100	Parent company and affiliated financial institutions, resident and non-resident except resident banks
-23180	Less: Accrued but not yet due interest

^1 - This table was added pursuant to Interim Decision No. 8312 dated 16/12/2002 (Interim Circular No. 26), effective for two years from issuance.

596 bis 2 Table No. 2

Mechanism for Mandatory Investments of Banks

• Bank name: _________________
• Bank number on the banks' list: _________________
• Bank deposits in Lebanese Lira subject to the 10% rate as of 31/10/2002: _________________
• Bank deposits in foreign currencies subject to the 10% rate as of 31/10/2002 (based on an average US dollar exchange rate of 1,507.50 L.L. or its equivalent in other foreign currencies): In foreign currencies equivalent to L.L.: _________________ / _________________
• Total bank deposits subject to the 10% rate, valued in Lebanese Lira as of 31/10/2002: _________________
• Bank's contribution to mandatory investment (10% of total deposits): _________________ L.L.
• This investment shall be distributed by currency as the subscribing bank wishes.
• This investment shall be distributed over seven stages, interest-free, covering the rate mentioned above in cash or treasury bills in L.L. or foreign currency.
• All treasury bills shall be calculated at their actual value upon mandatory investment (i.e., par value with accrued but unearned interest).

^1 - This table was added pursuant to Interim Decision No. 8312 dated 16/12/2002 (Interim Circular No. 26), and subsequently amended by Article 4 of Interim Decision No. 8371 dated 31/3/2003 (Interim Circular No. 30).

596 bis 3 Date: 17/1/2003

1. Cash: _________________ L.L. / Foreign Currency: _________________
2. Lebanese Treasury Bills (24-month term): Circular, Number of bills, Value due as of 17/1/2003
3. Lebanese Treasury Bills (Foreign Currency): Issuance, Number of bills, Value due as of 17/1/2003

596 bis 4 Date: 18/2/2003

1. Cash: _________________ L.L. / Foreign Currency: _________________
2. Lebanese Treasury Bills (24-month term): Circular, Number of bills, Value due as of 18/2/2003
3. Lebanese Treasury Bills (Foreign Currency): Issuance, Number of bills, Value due as of 18/2/2003

596 bis 5 Date: 18/3/2003

1. Cash: _________________ L.L. / Foreign Currency: _________________
2. Lebanese Treasury Bills (24-month term): Circular, Number of bills, Value due as of 18/3/2003
3. Lebanese Treasury Bills (Foreign Currency): Issuance, Number of bills, Value due as of 18/3/2003

596 bis 6 Date: 18/4/2003

1. Lebanese Treasury Bills (24-month term): Circular, Number of bills, Value due as of 18/4/2003
2. Lebanese Treasury Bills (Foreign Currency): Issuance, Number of bills, Value due as of 18/4/2003

596 bis 7 Date: 16/5/2003

1. Lebanese Treasury Bills (24-month term): Circular, Number of bills, Value due as of 16/5/2003
2. Lebanese Treasury Bills (Foreign Currency): Issuance, Number of bills, Value due as of 16/5/2003

596 bis 8 Date: 1/7/2003 Cash: _________________ L.L. / Foreign Currency: _________________

596 bis 9 Date: 1/8/2003 Cash: _________________ L.L. / Foreign Currency: _________________