Rania Chakhtoura, "Akhbar al-Yawm" agency

Lebanon’s New Central Bank Chief: A New Hope for Financial Reform

A key moment for Lebanon's financial future

After a long vacancy of about a year and a half, Karim Souaid was appointed as the Governor of Lebanon's Central Bank by a Cabinet vote, taking on the challenging task of addressing Lebanon’s financial and banking crisis, which has remained unresolved since 2019. In his remarks during the handover ceremony yesterday, Souaid expressed his awareness of the significant responsibility and challenges ahead, stating: "I understand the weight of this responsibility and the challenges of the moment. I commit to upholding the law and ensuring the institution remains independent and shielded from outside interference."

The main issue at hand is the protection of depositors. Souaid stressed the need to protect deposits under the law and constitution, emphasizing the importance of working towards their gradual return, with a focus on small depositors first. He added that repaying deposits would require the state, the banks, and the central bank to share the responsibility, with priority given to smaller depositors, followed by medium ones, and then others.

At first, Souaid's appointment seemed to spark a "battle" between two groups: one supporting the International Monetary Fund, and the other representing the banks. The first sought to control Souaid’s decisions, while the second tried to present him as a figure who was put in place by their influence. However, Souaid's speech yesterday made it clear that he was not influenced by the attacks and criticisms directed at him in recent weeks.

In fact, Souaid is the choice of President Joseph Aoun, who has remained firm in his support for him. This means Souaid is likely committed to pushing forward the required reforms, at least within the limits of his powers under the Law of Money and Credit.

An informed source mentioned that "President Aoun's support for Souaid's appointment should have been considered, especially given that we are at the beginning of what is described as a promising term. The President's insistence on Souaid's appointment shows a desire to align with his inaugural speech, particularly regarding the issues of deposits and the financial crisis, despite the questionable campaigns against him before his appointment. Therefore, it would be unjust not to give Saeed the opportunity to at least try to accomplish something".

In response to a question, the source added: "Karim Souaid is seen as a promising leader, and we hope to see tangible solutions to the crises in an effective and proper way. All the other details become secondary, though still important. He could make progress with the banks in finding a resolution to the deposit crisis. Furthermore, with his background in financial markets, he has the potential to achieve the reforms that are needed".