Dr. Sharkas: Banks are an essential pillar and a major partner in supporting national economy.

The Central Bank Governor, Dr. Adel Sharkas, affirmed that banks in Jordan have a pivotal role in dealing with the pandemic effects as a main pillar and a major partner in the national economy.

Dr. Sharkas said, in his first exclusive press interview with the Banks Magazine since he assumed his duties as the Central Bank Governor, that banks have dealt with the utmost flexibility and responsibility with their clients need including individuals and business institutions especially those whose cash flows have been affected by their activities or their incomes as a result of the pandemic in accordance with the requirements of Prudential banking supervision.

Dr. Sharkas stressed, in regards to the 2022 monetary policy, that the central bank’s main priority is to maintain monetary, financial and banking stability emphasizing that the fixed exchange rate of the Jordanian Dinar against the US dollar is the nominal pillar of monetary policy and macroeconomic stability.

He stressed that the Central Bank will continue to implement macro and partial supervisory and precautionary policies in line with the best international applications that can consolidate banking and financial stability, enhance the ability of banks and financial institutions to withstand shocks and efficiently manage risks and ensure the safety of their financial positions due to their main role in enhancing macroeconomic stability.

He pointed out that the Central Bank will maintain its financing windows until the economic recovery is secured, and it will take the necessary measures to confront any unexpected pandemic developments.

Dr. Sharkas said that there are positive and promising indications on the decline of the pandemic repercussions  on all economic sectors.

He elaborated that the available economic indicators show the resumption of positive growth in 2021 which is expected to reach 2.1% as tourism income grew by 89.9%, and national exports rebounded to grew by 18.1% during the first ten months of 2021. The record number of manufacturing production quantities increased by 14.6% during the first eleven months of 2021, and the volume of areas licensed for construction increased by nearly 57% during the first ten months of the same year.

Dr. Sharkas announced that the Central Bank will continue to work on its stated directions to regulate integrated digital banks in Jordan and to develop the necessary regulatory framework to allow their licensing to support the development of the Jordanian banking sector so as to keep pace with developments in a sustainable manner in parallel with the public needs in its various categories with fairness and efficiency in order to enhance financial inclusion in the Kingdom.

He stressed that promoting digital payments is among the Central Bank’s continuing priorities while developing a regulatory licensing framework of integrated digital banks.

He reiterated that the bank’s main objective is to maintain Jordan’s monetary stability achieve financial and banking stability and contribute to encouraging steady economic growth in accordance with the Kingdom’s general economic policies.

He pointed out that the Central Bank has adopted a monetary policy whose main focus is to maintain the fixed exchange rate regime for the Jordanian Dinar against the US dollar besides maintaining inflation rates at stable and low levels to preserve the Dinar purchasing power.

Dr. Sharkas stressed that, on the supervisory level, the Central Bank will apply macro and partial supervisory and precautionary policies in line with the best international applications that can consolidate banking and financial stability, enhance bank’s ability and financial institutions to withstand shocks and efficiently manage risks and ensure the safety of their financial positions due to their main role in strengthening macroeconomic stability.

He stressed that during the coming period facing the economic repercussions of the Corona pandemic which has entered its third year, is still an important priority especially that the world today is still awaiting the successive developments of the pandemic.

He said that the Central Bank, in turn, is closely following the repercussions of these developments, locally, regionally and globally as well as the channels of their impact on the global and the national economy.

He affirmed that the Central Bank’s measures, interventions and financing windows that avoided the worst downfalls of the pandemic will continue until recovery is secured for all economic sectors.

He stressed that the Central Bank would take all necessary monetary or banking measures to promote that recovery.

Dr. Sharkas pointed out that the fixed exchange rate policy of the Jordanian Dinar against the US dollar is the nominal basis of monetary policy and one of the most prominent pillars of confidence in macroeconomic stability and the local currency as an attractive pool for savings, enhancing the national exports competitiveness and attracting foreign investments.

He referred to the Central Bank’s continuous studies results and the successive assessments of the international financial institutions, particularly the International Monetary Fund, on the suitability of the current fixed exchange rate system to the Jordanian economy and to the macroeconomic fundamentals and its long-term equilibrium level clearly and explicitly in all its reports.

He stressed the strength and durability of the Jordanian Dinar which serves the economy, its stability and its competitiveness since its implementation in 1995.

He pointed out that the Central Bank enjoys complete independence in the exercise of its monetary and banking policies besides a solid institutional credibility that has accumulated throughout its long journey and a diverse as well as sophisticated system of monetary policy tools that guarantee monetary stability and the Jordanian Dinar attractiveness and its consolidation.

He stressed the Central Bank role in maintaining comfortable and high levels of foreign reserves, which currently amount to $18 billion, with a coverage rate of 9.5 months of the Kingdom’s imports of goods and services, which is more than three times the internationally recognized standard of three months.

He pointed out that the dollarization rate has maintained its decline and stability around the lowest levels since 2017 thanks to confidence in the solidity of the banking and financial system, the credibility and efficiency of monetary policy and confidence in the national economy and its stability.