The Qatar Central Bank (QCB) attaches great importance to Islamic financial technology (fintech), which is a very important tool needed to meet long-term sustainable development, economic diversification, and financial inclusion, QCB Governor H E Sheikh Abdullah bin Saoud Al Thani said yesterday.
Addressing the keynote speech at the 5th CEOs and Islamic Finance Leaders Roundtable organised by the Hamad Bin Khalifa University (HBKU), the QCB Governor added that Islamic financing is the most appropriate system to use to meet the economic and financial requirements in the Islamic market, and to provide social financing to fragile economies.
The QCB Governor, who is among the best central bank governors in the world for 2019, reiterated Qatar’s First and Second Strategic Plans for Financial Sector Regulation. He said the strategies, launched in 2013 and 2017, create a regulatory framework that fosters growth which is inclusive and sustainable, promotes innovation and financial technology while dealing with the issues of cybersecurity; is competitive and credible while continuing to nurture and develop human capital that contributes to a knowledge-based economy.
He added that cybersecurity is also a priority at QCB, and highlighted Qatar’s development in the field, after being ranked third in Arab world and 17th globally on the Global Cybersecurity Index in 2018.
The QCB has recently announced its plans to establish a centralised Shariah regulatory framework for Qatar’s Islamic banking sector, in line with the best global practice. The country’s central bank is also set to introduce its financial technology strategy, which aims to develop, collaborate, and connect the local banks to the country’s financial ecosystem in line with the Qatar National Vision 2030.
The roundtable discussion highlighted various social financing models and effective financial tools for fragile economies.
Dr Syed Nazim Ali, Director of Research Division & Centre of Islamic Economies and Finance at HBKU’s College of Islamic Studies, said that several millions of dollars of funds have already started to flow into fragile countries included in the Organisation of Islamic Cooperation (OIC), which are in the process of rebuilding their economies after long and sustained periods of war, conflicts, and neglect.
However, there is a lack of implementation of proper strategy, structures, and financial tools to address their needs leading to suboptimal allocation and ineffective deployment and disbursement of funds, he added.
“Addressing the development issues in fragile economies is a multi-faceted problem which requires collaborative approach. We are living in an age which is witnessing a sudden evolution of innovative models, technologies, and techniques. Older ways of social financing are being replaced by cost-effective models which promise greater reach, transparency, and impact. Technologies such as blockchain, crowdfunding, and online peer-to-peer lending has significantly altered the landscape of social financing,” Ali said.
Speaking about the philanthropic funds provided to fragile economies, Dr Abdulfatah Mohamed, Adjunct Professor at HBKU, added that there is inefficiency in the funds provided with an annual deficit of around 40 to 50 percent from what is needed to address the needs of 131 million people. Other factors such as political corruption and lack of capacity also hinders the efficient allocation of funds.
“Now is the time for the community of Islamic finance and community of academics to bring innovative solutions on the table such as blockchain and cryptocurrency, to catch up on the Millennium Development Goals and to aid fragile economies,” he added.