COVID-19 has added to the challenges confronted by central banks, which now have to address economic downturns, the emergence of new technologies and changing societal expectations, the Qatar Central Bank (QCB) governor HE Sheikh Abdullah bin Saoud al-Thani, stated.
Addressing the inaugural annual conference of the Qatar Centre for Global Banking and Finance at King’s Business School, London, QCB governor stated that one year into the pandemic, the global growth appears to be “uncertain” even after showing signs of recovery at the beginning of this year.
During the opening session of the two-day virtual conference on challenges facing the central banks in 2020, the governor quoted a report of the International Monetary Fund (IMF) that indicated that growth will rebound to 6 percent in 2021, after taking into account the strong efforts on the vaccination and support measures.
The second wave is turning into a significant threat for the holistic recovery and in this context, Qatar and the QCB have taken “proactive” policies, including the fiscal support of $21 billion or 14 percent of 2020 GDP, to support the economy.
These measures were introduced in March 2020 during the initial days of the pandemic. The government had come out with a national guarantee program, being administered by the Qatar Development Bank and executed individually by the local banks, Sheikh Abdullah added.
New requirements of the pandemic era
When the economies recover and the policymakers plan appropriate exit strategies, the key question that is being directed towards the central banks is “how better can we apply our policy tools to improve our economic and financial resiliency,” the governor said.
Sheikh Abdullah said conventional indicators such as GDP have become less useful in the crisis environment. This has increased the need for fast-moving and more reliable indicators that can better predict the behavior of the economy, especially during challenging times.
The COVID-19 has led to widespread acceptance of digitalization and under these circumstances, the pandemic has shown that the bank supervision needs to be more technology-driven than it was in the past.
Stressing that the policy response to the COVID-19 will turn the blueprint for climate protection policies, Sheikh Abdullah added, the central banks across the world have been increasingly facilitating a green economy through their policies.
“As these policy measures gain momentum, there is a need for high performance, low carbon and cheap sources of energy that permit climate-friendly growth,” Sheikh Abdullah said, noting the role of these measures would become important concerns for the central banks in the near future.