Articles


Thu - 19 Jul 2018 - 02:44 AM

written by : Mohamed Naguib Writer Archive -



In July 2014, we wrote a long article in Al-Ayyam under the title "Bank Capital" in which we explained the importance of the banking sector in being the artery of any economic system (Capitalist, socialist, Islamic, mixed).

We have demonstrated with evidence that during the global financial crisis (2008-2009), the central banks in the developed countries (when the crisis was at its height) placed in their priorities to protect themselves from collapse and to keep them going, for its importance to all segments and sectors of the national economy in general and individuals and society in particular.

These central banks have adopted no more than two strategies, forward and reverse, The first (forward) involved governments as partners in the largest banks that injected cash into the system represented bt their shares in the capital of the banking system, the plan has achieved the essence of their objectives.

For the second one (reverse) the banks resorted to quantitative easing which is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

Paralysis and unprecedented liquidity scarcity in the current Yemeni banking sector is similar to the previous example (of course with different sizes, degree of development, etc.).

- Liquidity injection is the first step the central bank should take to revive and move the wheel of the banking sector.

- We do not say that the central bank should be a partner with the Yemeni banks, its resources, as we know, are very scarce.

- Those who are in charge of the central bank must adopt realistic options to pull out this sector of the high-cost "intensive care unit".

- The Coalition countries (specifically Saudi Arabia, UAE and Kuwait) repeatedly confirmed their willingness to help and promote the role of the Central Bank of Yemen, Therefore, why does not the Central Bank of Yemen apply (as proposal) to the central banks in these countries to recommend their national banks starting investments in all and/or some Yemeni banks as "strategic partners", under the supervision of their central banks.

- For the information that the ratio of "1%" of the assets of banks in these countries worth more than "10 billion" dollars.

- In addition to the transfer of the latest technologies and advanced methods in the banking field which are used by the banks of these countries.

- The leadership of the Central Bank of Yemen should not be calmed down until it has a package of "options / remedies" to move forward and to restore confidence in the banking sector in Yemen. They should start reviewing the laws and policies of the Central Bank to cope with such a practical possibility.

- Let us take NCB as a a model in this logical scenario.

- The presence of an effective banking sector is one of the most important (maybe the most important of all) requirements for attracting national and foreign investments.