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Posted On: 3 November 2020 10:30 pm
Updated On: 12 November 2020 02:22 pm

Qatar Central Bank looking into electronic cheques to limit bounced cheques

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The Governor of Qatar Central Bank (QCB), H.E. Sheikh Abdullah bin Saoud Al-Thani, said Tuesday that the bank is currently looking into the development of a new system for issuing electronic cheques in coordination with the official authorities in the country to be a substitute for the use of paper cheques, to bring down the number of bounced checks with all its causes, whether technical or financial.

In an exclusive interview with Al-Raya newspaper published Tuesday, His Excellency said that the new controls recently issued by the Central Bank would limit bounced cheques. The bank is currently working on updating cheques instructions on an ongoing basis in coordination with the official bodies and agencies in the country, to limit the phenomenon of bounced cheques without balance due to their dangers and social and economic impact on both the source of the check and the beneficiary of it, whether they are individuals or companies.

Regarding Qatar Central Bank's role in combating money laundering and terrorist financing, H.E. the Governor said that the bank has developed one of the best national systems for combating money laundering and financing terrorism and combating the financing of proliferation of weapons of mass destruction in accordance with the best international standards and rules, that is based on a set of constantly updated laws and instructions. As well as applying supervisory standards to protect the state's economy from attempts to exploit it in money laundering, financing terrorism and the spread of weapons of mass destruction.

He noted that the flexibility of the country's economy, is a combination of factors, including policy measures of Qatar Central Bank and a strategy of economic diversification. Despite the sharp decline in energy prices due to the health crisis, local data showed a continuous rise in international reserves and liquidity in foreign currency at the bank. The available data indicate that those reserves are more than sufficient to cover the issued cash on the one hand, and also to meet the purchases of local banks of dollars within the exchange rate policy, as well as for monetary policy purposes, H.E. Qatar Central Bank Governor noted.

The ratio of the bank's international reserves and foreign currency liquidity to the issued cash at the end of May 2020, had amounted to more than 793 percent. That is, more than eight times the percentage that is required by law and must not be less than 100 percent, while the value of international reserves and foreign currency liquidity at the bank at the end of May 2020 amounted to about 203 billion riyals, equivalent to about $56 billion, His Excellency said.

Treasury bills issued by the bank, come within the framework of developing the monetary policy in the State of Qatar, increasing its effectiveness, contributing to the strength of the banking and financial system and activating open market tools as one of the monetary policy tools, His Excellency stressed.

On facing Coronavirus (COVID-19) crisis, His Excellency said that Qatar Central Bank has published circulars to confront the risks of the spread of the virus and has also played a pivotal role in confronting the pandemic through a package of measures. These include launching the National Guarantee Program to provide guarantees to private sectors, which guarantee payment of workers' wages and rents for a period of 9 months. In addition, all conventional and Islamic banks operating in the country, which have accounts for the wages protection system, have to accept financing requests submitted by these companies according to certain conditions and guarantees, including a grace period of one year and a low-interest rate.

His Excellency referred to the role of Qatar Central Bank in following the best and latest international standards in supervising banks and other financial institutions in the country, namely insurance companies, investment companies and funds, finance companies, exchange houses and financial advisory companies. With regard to banks, on top of these standards are the principles of effective supervision issued by the Basel Committee on Banking Supervision and the Islamic Financial Services Board for Islamic Banks, in addition to the standards issued by each of them regarding risk management and capital adequacy. In addition to the banks' commitment to adopting international accounting standards and international financial reporting standards.

Qatar Central Bank is one of the first supervisory authorities to adopt the updates issued to these standards on time, His Excellency added.

The regulatory department at Qatar Central Bank relies on extensive, comprehensive and field-based office and field monitoring systems and cadres at the highest level of quality. As a whole, this rule constitutes an integrated early warning control system that works on analyzing financial institutions' data, analyzing and discovering risks, weaknesses and irregularities and then taking appropriate remedial measures at the appropriate time, His Excellency said.

H.E. the Governor of Qatar Central Bank stressed the importance of pegging the exchange rate of the Qatari Riyal (QR) to the US dollar (USD) at a rate of QR 3.64 as one of the most important priorities of the bank's monetary policy objectives. The bank is always keen when making monetary policy decisions to pursue monetary policies consistent with local economic situations as well as regional and developments in order to maintain monetary stability and the local banking system and in line with the decisions of the US Federal Reserve in order to keep the interest rate differential at the required level, and thus maintain the stability of the riyal exchange rate against the dollar, he added.

H.E. the Governor of QCB stressed that the financial stability in the State of Qatar contributes to the success of its financial institutions, pointing out that the healthy growth of the real economy and financial stability reinforce each other to achieve economic prosperity for Qatar.

Source: Qatar News Agency