Page 48 - Annual Report 2017

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MACROPRUDENTIAL ANALYSIS In 2017, significant geopolitical uncertainties materialised, with the
impact yet to crystallise in the global and regional economies. With
the added political complexities arising globally, existing risks have
In 2017, under the Regulatory Authority’s risk-based supervision become more pronounced with important implications for finan-
framework, the Macroprudential Analysis department continued cial stability. The department produced three sequential reports
to provide key insights to microprudential supervisory staff, senior analysing in depth the impact of the regional blockade on Qatar’s
management, and the Board of Directors. economy and specifically the financial sector.
In considering risks from a macroprudential perspective, the The department assessed the following risks to global financial sta-
department identified and assessed relevant financial stability risks bility as important to monitor significant trends and developments:
by monitoring developments and trends on the global, regional, • the implications of low growth of the global economy;
and domestic fronts. The department supplemented the micro-
supervision framework with routine horizontal or cross-firm reviews • the effect of unconventional monetary policy, due to an era
to monitor developments and trends of Regulatory Authority of low inflation and low interest rates;
authorised firms (corporate banks, investment banks, investment • the influence of the slowing growth of the Chinese economy;
managers, advisory firms, insurers, and insurance intermediaries).
• the effect of the rapid growth of the shadow banking sector;
• the results of large-scale cyberattacks;
Monitoring and reporting
• the consequences of Brexit;
The department prepared regular internal reports providing an • the impact of the withdrawal of correspondent banking rela-
overview of key global macroeconomic, market, financial, political, tionships; and
and regulatory developments, based on the following structure: • the influences of rising populism and anti-establishment
• Global developments and trends in selected advanced and sentiment.
emerging market economies with interconnectedness to Qatar
and/or the QFC; Two emerging risks, the macroeconomic and macroprudential
consequences of which have not as yet fully materialised on a
• Regional developments and trends in the Middle East and
North Africa, with a focus on the Gulf Co-operation Council global scale, were also identified:
(GCC) countries, excluding Qatar; • the impact of the implementation of IFRS 9 in 2018; and
• Domestic developments and trends in Qatar; and • the risks of artificial intelligence and machine learning.
• Regulatory Authority authorised firms’ developments and
trends. The department deemed the following risks to regional financial
stability as the most significant in their potential to impact the GCC
region, Qatar, and the Regulatory Authority authorised firms:
• the impact of the blockade on Qatar;
• the regional geopolitical conflicts;
• the consequences of the persistence of low oil prices;
• the uncertainty surrounding the impact of key reforms by GCC
countries; and
• the withdrawal of correspondent banking relationships.
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Industry statistics and financial data
The Macroprudential Analysis department produced internal quar-
terly fact sheets with the intent of providing a macro view of the
Regulatory Authority’s authorised firms. The fact sheets are based
on standardised, aggregated data and are intended to be self-ex-
planatory through the use of tables and graphs. They highlighted
key facts, such as the size and scope of the different sectors.
The fact sheets included analyses and trends concerning the size
and structure of the sectors, business activity by license type, geog-
raphy and corporate structure. They also included analyses and
trends of key balance sheet and off-balance sheet items, profit-
ability, foreign currency activity, and performance and risk ratios for
the core risk areas (such as capital adequacy, credit risk, liquidity
risk and market risk).
Research and analysis produced at the macro level have con-
tinued to foster the position of the Regulatory Authority to carry
out its functions effectively and to contribute proactively and con-
structively to the work of Qatar’s Financial Stability and Risk Control
Committee (FSRCC), in close collaboration and partnership with
senior members of staff from the Qatar Central Bank and the Qatar
Financial Markets Authority. During the year, the department held
meetings with several external stakeholders to identify and discuss
key risks to domestic financial stability and prepared biannual finan-
cial stability indicators reports for the FSRCC.
A commitment to co-operation
The department also provided assistance and information to
different international organisations, including the International
Monetary Fund and the World Bank. It also contributed to the draft-
ing of the Financial Stability Report of the Qatar Central Bank, and
participated in meetings of the Economists Roundtable, collabo-
rating with economists from different Qatar ministries.