An official source from the Central Bank of Egypt (CBE) said on Saturday that the CBE and banking system draft law, known as banking law, will be send to the House of Representatives for approval before the end of May.
The source explained, in a statement to the Middle East News Agency, that this step will come after the cabinet completes its review and approve the bill.
He added that the new draft law, which consists of 240 articles, takes into account all the comments of banks, ministries, and other entities.
The cabinet’s economic committee reviewed the final version of the new draft law last week, in the presence of the CBE Governor Tarek Amer and the ministers of investment, immigration, manpower, planning, tourism, finance, trade, industry, and the public enterprise sector.
Amer said earlier that the new banking draft law comes within the framework of the country’s legislative reforms aimed at keeping abreast of rapid global developments in banking, payment systems, and financial technology.
According to the source, the new law would establish a committee for financial stability of the state, headed by the prime minister. This committee aims to maintain the stability of the Egyptian financial system and coordinate efforts to avoid and manage any financial crises in case they occur.
The source said the new committee would include the governor of the CBE, the finance minister, and the chairperson of the Financial Regulatory Authority.
He added that the new law obliges the government to reorganise the coordinating council to set up a coordination mechanism between the monetary policy of the CBE and the government’s fiscal policy. The council will include representatives from the government, the CBE, and a number of experienced experts.
The new draft law regulates the cooperation between the CBE and foreign counterparts in order to coordinate and exchange information in accordance with the principle of joint control. This includes the signing of memorandums of understanding (MoU) and participation in supervisory groups, or groups to resolve the situation of troubled banks.
The source revealed that the new draft law obliges the CBE to increase its capital to EGP 20bn.
Furthermore, the source said that the current law had set a minimum capital of the CBE at EGP 4bn and authorised the board of directors of the bank, in coordination with the ministry of finance, an increase, where the capital of the bank during the past years is to be EGP 16bn.
This comes at a time when the financial statements of the CBE revealed that the bank’s capital increased to EGP 21.6bn by the end of June 2018. The capital was increased by EGP 6bn during the fiscal year 2017/18 with the cooperation of the ministry of finance, and funded by the state treasury.
The source added that the draft law defined the CBE as a supervisory body with a future of a general legal entity, subsequent to the President of the republic, and enjoys technical, financial, and administrative independence. It also set its objectives in accordance with the provisions of the constitution in ensuring the safety of the monetary and banking system and the independence of prices.
He explained that the draft law re-examined the mechanism of appointing the CBE governor to comply with the provisions of the Constitution, where he will be appointed by the president for a period of four years and can be renewed for one more term after the approval of the majority of the members of the House of Representatives.
The draft law specifies the selection criteria of the CBE governor as well as his deputies and members of the board of directors. It also specified the authorities of the CBE governor, his deputies, and members of the board of directors. The majority of the board members are non-executive.
According to the source, the draft law aims to support the CBE to ensure the achievement of its objectives and protect competition and the rights of consumers.