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Governors of Arab Banks Discuss Cross-Border Payments

Governors of Arab banks meet at a roundtable meeting on Central Bank Digital Currencies (CBDC) in Jeddah, Saudi Arabia. (Asharq Al-Awsat)
Governors of Arab banks meet at a roundtable meeting on Central Bank Digital Currencies (CBDC) in Jeddah, Saudi Arabia. (Asharq Al-Awsat)
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Governors of Arab Banks Discuss Cross-Border Payments

Governors of Arab banks meet at a roundtable meeting on Central Bank Digital Currencies (CBDC) in Jeddah, Saudi Arabia. (Asharq Al-Awsat)
Governors of Arab banks meet at a roundtable meeting on Central Bank Digital Currencies (CBDC) in Jeddah, Saudi Arabia. (Asharq Al-Awsat)

Merits of using digital currencies in cross-border payments, specifically inter-Arab payments, were discussed on Monday by governors of Arab banks at a roundtable meeting on Central Bank Digital Currencies (CBDC) in Jeddah, western Saudi Arabia.

Many central banks in the Arab world have the infrastructure that enables them to launch digital currencies, especially the countries of the Gulf Cooperation Council (GCC).

GCC member states have proved they possess the tools and expertise needed in implementing digital currency programs. This was indicated by a survey conducted by the Arab Monetary Fund.

The survey found that 76% of 17 Arab central banks are studying the possibilities of issuing CBDCs.

In a speech at Monday's event, Saudi Central Bank (SAMA) Governor Fahad Al-Mubarak highlighted the need of the financial sector tapping into all information technology, including artificial intelligence and digitization.

The Fourth Industrial Revolution brought about emerging technologies and innovative work models that could help the financial sector reduce costs and offer better service, Al-Mubarak pointed out.

Urging the central banks to make better use of the new technologies to revitalize the Arab economies, he said these banks should take stock of the distinctive needs and characteristics of each country while issuing digital currencies.

He also suggested analyzing the possible impacts of issuing a digital model of sovereign currencies and conducting the necessary tests with a view to better understanding of future policies and legislations.

Abdulrahman Al Hamid, who currently serves as Director General Chairman of the Board in the Arab Monetary Fund, noted that there is an accelerating pace of digitization of financial services.

Digitization, according to Al Hamid, is largely driven by innovation in financial infrastructures, the use of distributed records technology, and the provision of various aspects of digital currencies to central banks.

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Lebanon Hopes to Meet Foreign Bondholders in Coming Year, Finance Minister Says

A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)
A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)
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Lebanon Hopes to Meet Foreign Bondholders in Coming Year, Finance Minister Says

A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)
A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)

Lebanese officials hope to meet international bondholders to talk about restructuring debt in the next 12 months but are not planning any meetings at the World Bank/IMF Spring meetings next week, finance minister Yassin Jaber said on Tuesday.

Jaber spoke to Reuters just days before travelling to Washington for the Spring meetings - one of the biggest gatherings for financial policy makers and investors - where Lebanon will seek to show it has made progress on economic reforms to address the underlying causes of its financial crash.

Lebanon's economy began unravelling in 2019 after years of corruption and profligate spending by the country's ruling elite, and tipped into a sovereign default on its $31 billion of outstanding international bonds in March 2020.

Asked whether he planned to meet international bondholders in the next year, Jaber said, "definitely, definitely, this is as they say the elephant in the room."

"You can't escape it in the end. Lebanon is keen to resolve this issue, God willing," he said.

But the country needed to make progress on reforms - including reforming the banking sector and boosting government revenues through reforms to tax systems and customs collection - before it could start talks, Jaber said.

"We wanted, first of all, to do our homework, to put the whole reform process on the right track to get started. You can't have a house in total disorder and then say, 'I want to negotiate,'" he said.

The Lebanese delegation to the spring meetings will be the first outing at an IMF/World Bank meeting for Lebanon's new government, which took the reins in February and pledged to seek a new IMF programme. Jaber said it would be the first time a Lebanese finance minister attends in more than a decade.

Economy Minister Amer Bisat is scheduled to give an outlook on Lebanon's economy at a JPMorgan investor conference held on the sidelines, according to documents seen by Reuters.

The creditor group - which includes the heavyweight funds Amundi, Ashmore, BlackRock, BlueBay, Fidelity and T-Rowe Price as well as a group of smaller hedge funds - has recently appointed a financial advisor in preparation for debt talks.

Shortly after the bondholder group originally formed in 2021, it said it held a "blocking stake" of more than 25% across a number of Lebanon's bonds, making it a critical player in any debt restructuring.

The chunk of the bonds are also held by domestic commercial banks or the Lebanese central bank, which bought $3 billion of debt directly from a previous government in 2019.

Lebanon's bonds trade at deeply distressed levels of around 15-16 cents in the dollar. However, that is a sharp uptick from the single digits they traded in before Israel's military campaign badly weakened Lebanese armed group Hezbollah, long viewed as an obstacle to overcoming Lebanon's political paralysis.

In January, Lebanon's cabinet extended the statute of limitations on legal action over Eurobonds for another three years. Jaber said the move "reassured the bondholders".