Financial stability forum opens in Amman | Business | Ammon News

Financial stability forum opens in Amman

[7/22/2019 1:02:35 PM]

AMMONNEWS - Deputy Governor of the Central Bank of Jordan (CBJ), Adel Sharkas, on Monday opened a forum on strengthening financial stability organized by the Union of Arab Banks in cooperation with the CBJ and the Association of Banks in Jordan.

In a speech delivered on behalf of the CBJ Governor, Sharkas said the banking industry is facing a multitude of challenges arising from successive global financial and economic downturns and political unrest in some countries of the region.

Such challenges, he added, need to be addressed by strengthening the banking sector's ability to withstand risks and absorb shocks, applying sound corporate governance rules, activating the role of risk departments, enhancing compliance with local and international laws and standards, and boosting banks' capital and liquidity.

Sharkas indicated that the global financial crisis had proved that stability at the individual level had never been enough to achieve financial stability without addressing risks at the financial system level, which requires hedging and measuring these risks and the application of prudential policies and control measures at the macro level.

He noted that CBJ established a financial stability department at the beginning of 2013 to work in a complementary manner with other functions of the bank to maintain monetary and financial stability in the Kingdom.

"Strict compliance, risk management, commitment to AML/ CFT requirements and know-your-customer approach are imperative to enhance banking safety and mitigate the risks associated with correspondent banks, which are threatening to drive many banks in the Arab countries out of the banking market as global banks cut or stop their operations with such banks," Sharkas emphasized.

He pointed out that the CBJ attaches importance to the activation of risk and compliance departments in banks, as it was one of the first central banks in the region to implement Basel 3 and issue instructions to apply IFRS 9.

In 2016, the CBJ issued new instructions to develop stress tests and also macro-stress tests concepts that measure the impact of macroeconomic variables on the banking sector.

Director General of the Association of Banks in Jordan Adly Qandah said preserving financial stability has become a challenge for central banks in both developed and developing countries, in light of the increasing shift towards globalization and financial liberalization.

"Achieving sustainable economic stability requires an advanced and stable financial sector capable of channeling savings to finance productive investment opportunities that can create more job opportunities and raise productivity levels to the maximum possible levels," he said, adding that: "Stability in the financial sector can be seen as a starting point towards economic stabilization."

Furthermore, Qandah emphasized that achieving financial stability requires monetary stability and the ability of the sector to bring the prices of financial instruments at the target levels, underlining the need for a clear structure of interest rates in line with local and international economic developments.

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