Dubai: Central banks in emerging markets need to think strategically about the adequacy of their power to address crises such as COVID-19 pandemic, said Abdulhamid M. Saeed Alahmadi, Governor of the UAE Central Bank.
The CBUAE governor said policy space may be more restricted in emerging markets, which calls for close coordination between fiscal and monetary authorities. An additional discussion point included the broader issue of exiting from the temporary regulatory relief measures during the pandemic.
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He was participating as lead speaker at the Meeting of Governors from Major Emerging Market Economies organized by the Bank for International Settlements, via video conference. Alahmadi said central banks have an important role in mitigating the repercussions of the crisis.
Alahmadi underlined structural trends in the banking and financial industry accentuated by the present crisis, especially the importance of further digitalization and delivery of financial services through new channels. While capitalizing on the benefits of the digitalization, emerging markets also need to address financial inclusion and ensure traditional banking channels remain available for people of determination and the elderly.
Once economies are in a position to recover, central banks need to act in a careful and phased manner to avoid a sharp deterioration of credit supply. As regulators, the UAE governor emphasised the role of central banks in monitoring credit quality and provisioning while thriving for innovation to continue to promote financial stability.