Qatar Central Bank (QCB) has introduced a package of precautionary measures to support the country’s financial system amid growing geopolitical tensions in the region.
The central bank said its review of recent developments found Qatar’s banking sector remained resilient, with strong liquidity, capital levels well above regulatory requirements and provisions providing solid coverage against credit risk.
Banks continue to hold substantial liquidity in both Qatari riyals and foreign currencies, with sufficient resources to meet customer demand, support normal market activity and absorb short-term funding pressures under stressed conditions, according to the review.
Despite that assessment, Qatar Central Bank said uncertainty in the external environment warranted additional precautionary support.
The central bank will offer unlimited Qatari riyal repo facilities against eligible securities held by banks in order to maintain liquidity in the local market.
Alongside its existing overnight repo window, the central bank will introduce a new term repo facility with maturities of up to three months to give lenders greater certainty over cash-flow management during the current period.
Qatar Central Bank will also reduce reserve requirements on deposits to 3.5 per cent from 4.5 per cent, a move designed to release additional liquidity into the banking system.
The measures also include temporary relief for borrowers. Banks will be permitted to offer customers affected by current conditions the option to defer principal and interest payments for up to three months, subject to each lender’s internal policies and supervisory guidance.
The central bank said Qatar’s financial sector had demonstrated resilience during previous periods of global market stress and that current conditions had not altered the sector’s underlying strength.
However, it added that it would continue to monitor global, regional and domestic developments closely and would act further if needed to preserve financial stability and orderly market functioning.
