QCB does not anticipate 'immediate requirements' for retail digital currency: Sheikh Abdulla

 

The Qatar Central Bank does not anticipate any “immediate requirements” for a retail digital currency for Qatar, said HE the QCB Governor Sheikh Abdulla bin Saoud al-Thani.
In KPMG’s ‘Qatar Banking Perspectives 2021’, Sheikh Abdulla replied to a question on the feasibility of the QCB issuing a digital currency in the near future.
Sheikh Abdulla said, “The Covid-19 pandemic prompted a shift towards digital payments and an increased discussion on the development of (Qatar) Central Bank’s digital currencies. This included fostering financial inclusion and generating opportunities by lowering the barriers to access financial services, reducing customer cost, and improving cross border trade and integration.
“However, challenges to the public payment systems, monetary policy and financial stability need to be studied in detail and the trade-off between risk and opportunities must be assessed. In the case of Qatar, close to 90% 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 digitalisation initiatives.
“The QCB, therefore, does not anticipate any immediate requirements for a retail digital currency for Qatar. However, the 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.”
On the key reasons for restrictions on cryptocurrency in Qatar and whether this is expected to be eased anytime soon, Sheikh Abdulla said, “Cryptocurrencies are in general considered as speculative assets and the probability of its use for unwarranted transactions cannot be ruled out. The restrictions are imposed due to the inherent risks associated with cryptocurrencies since they pose significant challenges to the stability and integrity of the financial system.
“However, the QCB is closely monitoring technological and regulatory cryptocurrency developments and will take appropriate decisions in due course.”
Asked whether he expected to see the emergence of digital-only banking players in Qatar or simply more digitisation of existing banks, the QCB governor said, “The QCB is open to any innovation in the financial sector, including digital only banks. At the same time, the QCB is committed to addressing any challenges they pose to the incumbent banks and other financial service providers to ensure a level playing field. The QCB will therefore follow a more calibrated approach in promoting digital banking among existing banks and new entrants.”
Sheikh Abdulla spoke about the QCB’s proactive support to Qatar’s banking sector in recent months due to Covid-19 challenges. Asked how long he expected this support to continue, he said, “At the outbreak of the pandemic, the QCB 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.
“These comprehensive support measures in the form of financial and economic incentives across all sectors were essential during the pandemic. The continuation of these support measures depends on the evolving circumstances and the high-level directives from the State.”