Khalaf Discusses Gap Law Questions

The article concerns a review and analysis of Lebanon's Deposit Recovery Law, with a focus on the practical and financial challenges faced in its implementation. It explains that the law, which guarantees depositors' repayment without specifying sources of liquidity or enforcement mechanisms, may worsen the crisis rather than resolve it—especially if many banks are liquidated. These banks currently hold around 550,000 accounts containing over $29 billion in deposits. The article discusses the ability of the Deposit Guarantee Fund to bear this burden, as well as the capacity of the remaining banks to continue operating, the adequacy of the set timeframes, and the soundness of the repayment procedures. It also emphasizes the necessity of clarifying the sources of funding from the Central Bank and the government to ensure successful implementation. The piece stresses that without real liquidity, a genuine return of deposits or economic recovery cannot be achieved.

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