Speaker Nabih Berri withdrew a provision sought by central bank governor Karim Souaid after Hezbollah objected to language that would have clarified the authority of the new banking supervision body.
After weeks of discussion, the third article of the banking reform law reached the general assembly in a text that emerged from agreement between the government and the central bank, shaped by the presidency. The provision at issue would have explicitly tied the new higher banking committee to the Money and Credit Law and the central bank's governing council.
Karim Souaid, the central bank governor, had written to request that implementation of the article be bound to the Money and Credit Law, specifically Article 70, to prevent conflict between the powers of the central bank's board and those of the new higher banking committee that will handle troubled banks. Souaid wanted the new body to operate within the framework set by existing monetary law, keeping the central bank board's authority distinct and separate.
The wording faced objection from the Hezbollah parliamentary bloc, which according to sources insisted on dropping the reference that Souaid had requested. When Hezbollah signalled its objection to the text, Ali Hassan Khalil, the political adviser to Berri, moved to drop the provision altogether.
In the general assembly, the version proposed by the finance and budget committee was rejected, and with it the explicit reference to the Money and Credit Law and to the central bank board's powers disappeared from the final text. No alternative language on the relationship between the new committee and existing monetary law was substituted.
Sources indicate the dispute involved more than technical drafting. The policies Souaid has pursued at the central bank, particularly strict enforcement of money-laundering and terrorism financing rules, along with financial matters connected to the good loan programme, are at odds with Hezbollah's interests. Souaid had wanted text making clear that the new body would not operate in a vacuum and that the Money and Credit Law and the central bank's authority would remain in force.
Berri dropped the reference, according to sources, after Hezbollah objected. An agreement that the presidency had helped shape collapsed when it met Hezbollah's opposition. The episode reveals again how closely financial decision-making and political calculation are entangled in Lebanon's parliament.
The removal of explicit safeguards for the central bank's role has consequences for how the new higher banking committee will operate. Without reference to the Money and Credit Law, the committee's relationship to existing monetary authority is now unclear, potentially allowing it broader room to act without constraint from the central bank board.
Souaid's position was that statutory clarity would protect both institutions from overlapping mandates and ensure the central bank retained its role in monetary policy and financial oversight. His defeat on this point means the new supervisory body's actual powers and limits will depend on how it is interpreted and applied, not on explicit legal delineation.
What remains unresolved is whether the banking committee will function independently or within the framework of existing monetary law. The political decision to remove Souaid's language has shifted that question from the statute to practice, where it will likely surface again as disputes arise over the committee's scope of action and the central bank's role.
