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committee approves bank law amid criticisms at an april 9 meeting of parliament’s economic committee, the body approved the long-debated unified banking law. the law – which had already been approved by the shura council – aims to “guarantee the independence” of the central bank of egypt (cbe) and bring the banking sector up to international standards. according to prime minister atef ebeid, who presided over the meeting, the law promises to provide the local banking industry with “transparency and depth” by replacing the six outmoded laws that had previously governed the banking sector with one, unified code. the committee’s approval, however, only came after a heated debate among parliamentarians over several aspects of the law, particularly its controversial first chapter, which spells out the extent of the cbe’s independence vis-à-vis the chief executive. ebeid asserted that, while the law wouldn’t give total independence to the cbe, it would at least allow it “to choose the most convenient ways to carry out policy.” monetary policy, in a word, will continue to be determined from above. the prime minister defended the compromise, saying that egypt’s economy simply wasn’t ready for an independent central bank. “the total independence of central banks exists only in developed countries,” he said. “however, we can amend the law when we catch up with their advanced economies and low rates of unemployment.” the law will bolster the cbe’s authority over other banks, however, both public and private. the cbe will, for example, estimate market demand for banks and determine which ones will or will not be allowed to operate in egypt. additionally, cbe permission will be required both to establish new banks and to approve mergers between existing banks. “this law will solve one of the complaints of academics, who have long said that the egyptian economy is over-banked,” said mahmoud mohieldin, chairman of the national democratic party’s economy committee, at a conference held by the egyptian young bankers association (eyba) on april 16. the law will also give the central bank a say in the selection of local bank presidents. according to cbe governor mahmoud abul-eyoun, who also spoke at the eyba conference, “any person who’s installed in a major position at a bank has to pass our test before he can assume such a position.” he added that the cbe reserved the right to oust bank heads “if they’re endangering the welfare of their banks.” before the april 9 parliamentary session adjourned, however, several mps had raised criticisms both of ebeid’s speech and the new bill, calling for a truly independent cbe after the pattern of developed economies. “egypt has to separate between the monetary and executive power as the majority of the world does,” objected mounir fakhri abdel nour of the wafd party, declaring that executive authority will still control the cbe, and hence, monetary policy. other parliamentarians pointed out that the law gives the prime minister the right to simply appoint cbe governors. “how can we expect an appointed governor to discuss and correct the policies of the executive power,” asked moustafa al-sallab, member of parliament and head of the al-obour city investors group. al-sallab went on to request that the government provide both houses of parliament with more detailed explanations of certain of the law’s articles, pointing out that there were several clauses in need of clarification. some attendees questioned other aspects of the law, like the stipulation that only retired university professors could be hired to train cbe staff. “i can’t see any reason for choosing retired experts and not allowing working university professors who may be more qualified,” said mohamed aboul enein, head of parliament’s housing committee. responding to the criticisms, said al-alfi, chairman of the economic committee, said that mps’ comments and questions would be discussed in the assembly at a further juncture. having been approved by the economy committee, the
law’s next stop will be the people’s assembly, where it
will, in the first week of may, be either approved or sent back
for further amendments. mohamed mursi |
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