No immediate need for digital currencies in Qatar: QCB guv
THE Qatar Central Bank does not anticipate any immediate requirements to introduce digital versions of physical cash, its Governor Sheikh Abdulla bin Saoud Al Thani has said.
However, QCB does monitor the developments in digital currencies by central banks in various other jurisdictions and will make appropriate policy decisions based on emerging information, he added in an interview featured in KPMG’s “Qatar
Banking Perspectives 2021” report.
Although the idea of a central-bank issued digital currency is gaining traction, in Qatar, he said, it is not required in the near future.
“C lose to ninety percent of the broad money in the system is already in the digital form of deposits with commercial banks. The share of currency in circulation is expected to reduce further with the introduction of additional national digitalization initiatives,” he said.
In 2018, Qatar’s central bank banned bitcoin trading in an effort to “ensure the safety of the financial and banking system”. In December last year, the Qatar Financial Centre Regulatory Authority (QFCRA) declared that all virtual asset services are banned in the Qatar Financial Centre (QFC) except for digital asset services concerning token securities. The QFC is a special jurisdiction within the country with its own legal, business, tax, and regulatory infrastructure.
Sheikh Abdulla said the restrictions on cryptocurrencies in Qatar are imposed due to the inherent risks associated
with them since they pose significant challenges to the stability and integrity of the financial system.
“Cryptocurrencies are in general considered as speculative assets and the probability of its use for unwarranted transactions cannot be ruled out.”
However, he said QCB is closely monitoring technological and regulatory cryptocurrency developments and will take appropriate decisions in due course.
Talking about the banking sector prospects in a postpandemic world, Sheikh Abdulla said overall, the sector remains safe, sound and solid in Qatar.
The government and QCB took proactive steps to contain the impact of the COVID-19 pandemic, with a particular focus on support for small and medium enterprises. A distinct part of these measures included injecting capital into systemically important sectors, thereby to an extent, neutralizing the short-term impact on the financial market. It is important that our banking sector has sufficient space to perform its intermediation function, while addressing the unfolding risks. The sector has a high capital cushion level while the loan delinquency levels are low. At the same time, liquidity improved as banks were able to obtain funds from both external and domestic sources,” he said.
At the outbreak of the pandemic, the governor said the central bank implemented monetary and financial regulatory measures to support affected sectors. These measures were introduced in March 2020 and were extended in response to the evolving circumstances. The continuation of these support measures depends on the evolving circumstances and the highlevel directives from the government, he added.