H E Sheikh Abdulla bin Saoud Al Thani , Governor of Qatar Central Bank
A series of quick and proactive measures taken by the government and Qatar Central Bank (QCB) in response to the blockade helped tide over the after effects of the siege (imposed in early June 2017). It had no lasting impact on the economy, which rebalanced quickly within the second half of 2017, the Governor of QCB, H E Sheikh Abdulla bin Saoud Al Thani, told ‘The Business Year’ in an exclusive interview to its ‘Qatar 2020’ annual report.
The QCB Governor noted that the government also took various measures to improve the investment environment, encourage local manufacturing industries, initiate self-sufficiency in dairy and farm products, expand into new air and sea routes, offer visa-free entry, and enact fiscal reforms through expenditure rationalisation, among others. These initiatives revived the economy and ensured more private-sector participation in the overall development of the economy.
Commenting further on the policy move by the banking sector regulator that helped restoring stability, Sheikh Abdulla said: “QCB’s active liquidity management has brought liquidity in the banking system back to complete normalcy, making the sector sound and profitable. Renewed international investor confidence also reinforced the stability of financial markets. QCB also proactively utilised communication channels to establish stability in the price of Qatari Riyal within a short span of time. Thus, it is not one policy measure, but a combination of policies by the authorities that helped the economy prudently manage its assets.”
Speaking about the policy tools taken by the QCB to defend the Qatari riyal, which reportedly had come under pressure after the blockade, he said that the Qatar’s banking sector, the mainstay of the financial sector, has remained sound and liquid, part of which was because of the introduction of Basel III guidelines back in 2013-14, which ensured a strong capital base for the banks.
“The pool of high-quality liquid instruments with the introduction of treasury bills and bonds in 2011 also enabled the banks to withstand the sudden liquidity pull back from the blocked countries. QCB has also set up an internal emergency committee to monitor the developments in various segments of the financial sector. Based on its assessment by analyzing high-frequency data on select financial sector parameters, the committee provided suggestions for policy measures that could be taken by QCB. In response to a withdrawal of funds by the blockade countries, liquidity management measures were taken by QCB and supported by the government and public-sector entities,” added the QCB Governor.
“A speculative attack on the currency was also warded off through the announcement of our firm commitment to the peg. Legal investigations were also initiated against banks involved in speculative attacks. With the return of confidence, the stock market, which declined in the immediate aftermath of the blockade, has also fully recovered.”
On the opportunities and regulatory challenges with regards to fintech and its potential impact on the Qatari banking system, Sheikh Abdulla highlighted that fintech activities have grown exponentially in the global financial sector arena in recent years, and QCB is actively working on developing strategies to adapt to this changing horizon.
The QCB Governor also acknowledged the potential benefits of the technology adding that fintech can bring positive change to the sector, but also additional risks. It helps financial sector stakeholders streamline their processes to achieve more efficiency and faster delivery, in addition to facilitating communication with their customers to better understand their needs and enhance their access to financial services.
“Fintech is also known to increase the contribution of the financial sector to GDP, diversify the economy, and create new market dynamics, which is why we are formulating an approach to fintech that takes lessons from other major global initiatives.”
