Narrow Your Choices

Refine By Topic

Refine By Series

Refine By Language

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Middle East and Central Asia > Saudi Arabia

You are looking at 1 - 10 of 15 items for :

  • Type: Journal Issue x
  • Liquidity; Economics x
Clear All Modify Search
Cover IMF Working Papers
U.S. Monetary Policy Spillovers to GCC Countries: Do Oil Prices Matter?
Mr. Olumuyiwa S Adedeji
,
Mr. Erik Roos
,
Mr. Sohaib Shahid
, and
Ling Zhu
This paper provides empirical evidence that the size of the spillovers from U.S. monetary policy to non-oil GDP growth in the GCC countries depends on the level of oil prices. The potential channels through which oil prices could affect the effectiveness of monetary policy are discussed. We find that the level of oil prices tends to dampen or amplify the growth impact of changes in U.S. monetary policy on the non-oil economies in the GCC.
Keywords:
WP; oil price; price; federal funds rate; GCC.; Growth; Gulf Corporation Council; Spillovers; U.S. Monetary Policy; liquidity fluctuation; monetary policy spillover; GCC country; interaction term; Oil prices; Real interest rates; Central bank policy rate; Liquidity; Global
Cover IMF Working Papers
Liquidity Management under Fixed Exchange Rate with Open Capital Account
Mariam El Hamiani Khatat
and
Mr. Romain M Veyrune
This paper introduces a theoretical framework for liquidity management under fixed exchange rate arrangement, derived from the price-specie flow mechanism of David Hume. The framework highlights that the risk of short-term money market rates un-anchoring from the uncovered interest rate parity due to money and foreign exchange market frictions could jeopardize financial stability and market development. The paper then discusses operational solutions that stabilize money market rates close to the level implied by the Uncovered Interest Rate Parity (UIP). Liquidity management under fixed exchange rate with an open capital account presents specific challenges due to: (1) the larger liquidity shocks induced by foreign reserve swings that challenge the development of money markets; and (2) more complicated liquidity forecasts. The theoretical framework is empirically tested based on the estimate of “offset” coefficients for Denmark and Hong Kong SAR.
Keywords:
WP; exchange rate; central bank; interest rate; rate; Fixed exchange rate regime; price-specie flow mechanism; uncovered interest rate parity; offset coefficients; monetary operations; autonomous factors; money and foreign exchange markets; discount window; capital account; supply curve; money market rate; excess reserves; FX intervention; central bank liquidity management; liquidity absorption operation; liquidity-providing operation; liquidity shock; money demand; country risk; Conventional peg; Exchange rate arrangements; Money markets; Liquidity management; Global
Cover IMF Working Papers
Determinants of Currency Composition of Reserves: a Portfolio Theory Approach with an Application to RMB
Miss Yinqiu Lu
and
Yilin Wang
The way central banks manage their foreign reserve assets has evolved over the past decades. One major trend is managing reserves in two or more tranches—liquidity tranche and investment tranche—especially for those with adequate reserves. Incorporating reserve tranching, we have developed in this paper a central bank’s reserve portfolio choice model to analyze the determinants of the currency composition of reserves. In particular, we adopt the classical mean-variance framework for the investment tranche and the asset-liability framework for the liquidity tranche. Building on these frameworks, the roles of currency compositions in imports invoicing and short-term external debt, and risk and returns of reserve currencies can be quantified by our structural model—a key contribution of our paper given the absence of structural models in the literature. Finally, we estimate the potential paths of the share of RMB in reserves under different scenarios to shed light on its status as an international currency.
Keywords:
WP; government bond; exchange rate; currency composition; FX reserves; portfolio theory; RMB; liquidity tranche; FX reserve; investment tranche; allocation decision; Currencies; Reserve currencies; Liquidity; Global
Cover Policy Papers
Gulf Cooperation Council: Strengthening Liquidity Management Frameworks in Support of Stability and Growth in the GCC
International Monetary Fund
Effective liquidity management is important to promote macro-financial stability in the GCC countries. Fixed exchange rate regimes provide credible nominal anchors in the GCC countries, but combined with open capital accounts, they also entail limited monetary policy independence. At the same time, high dependence on hydrocarbon revenue has made the region vulnerable to oil price-driven liquidity swings. And the latter can affect monetary policy implementation, including by exacerbating credit and asset price cycles. This highlights the importance of frameworks aimed at forecasting liquidity and ensuring appropriate liquidity levels through the timely absorption or injection of liquidity by central banks. Over the past decade, liquidity management in the GCC countries has been based mainly on passive instruments. Abundant liquidity during times of high oil prices have placed liquidity absorption at the center of the central bank operations. Reserve requirements have helped absorb liquidity but have not been used very actively. Standing facilities, another key instrument, are more passive in nature, with the amount of liquidity absorbed or injected driven by banks rather than monetary authorities. Central banks bills or other instruments have also been used, but issuance has not systematically been based on market principles. In addition, these operations have been constrained by limited liquidity forecasting capability and the shallow nature of interbank and domestic debt markets.
Keywords:
PP; liquidity condition; GCC country; GCC liquidity; liquidity fluctuation; evolving liquidity challenge; liquidity development; liquidity environment; liquidity forecasting capability; liquidity imbalance; liquidity management effort; liquidity management instrument; liquidity price-discovery mechanism; liquidity management framework; management operation; liquidity forecasting; Liquidity; Liquidity management; Interbank markets; Oil prices; Interbank rates; Global
Cover IMF Staff Country Reports
Saudi Arabia: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
The FSAP took place during the aftermath of a major shock for the Saudi economy, whose repercussions were still being felt despite a decisive policy response. During 2015–16, the decline in oil prices led to a sharp fall in oil revenues. Government spending was cut and payments to some suppliers were delayed, adding to the contractionary effects on the economy. Combined with sharply increased domestic government borrowing, these developments contributed to a tightening in banking system liquidity. SAMA injected liquidity and relaxed the prudential ratio on banks’ lending to deposits. These measures were effective and, by end-2016, as government arrears were being repaid, the situation in the banking system had started to normalize.
Keywords:
ISCR; CR; banking system; price index; exchange rate; financial condition; risk profile
Cover IMF Staff Country Reports
Saudi Arabia: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper assesses the stability of Saudi Arabia’s financial system as a whole. Banks—the core of the Saudi financial system—remain liquid and resilient. Stress tests show that most banks, including all systemically important banks, would be able to continue operating and meeting regulatory capital requirements in the event of additional severe economic shocks, characterized by oil prices falling substantially below current levels. Despite the recent liquidity challenges, all banks would also be able to cope with additional adverse liquidity shocks. The authorities’ ambitious agenda for improving macro- and microprudential financial sector oversight should be fully implemented and, in some cases, enhanced and further refined.
Keywords:
ISCR; CR; banking system; price index; exchange rate; financial condition; risk profile; Sama manage liquidity; commercial bank; liquidity management framework; repo facility; EWS analysis; balance sheet composition; liquidity condition; funding strategy; asset quality; Sama strategy document; control department; Liquidity; Commercial banks; Liquidity management; Macroprudential policy; Financial sector stability; Global
Cover IMF Working Papers
What Influences Bank Lending in Saudi Arabia?
Mr. Ken Miyajima
Determinants of bank-level credit growth in Saudi Arabia are investigated by applying a panel approach to data spanning 2000–15. Strong bank balance sheet conditions, economic activity, and oil prices support bank lending. Reduced bank concentration appears to have helped. Lending remained robust in 2015 despite oil prices having declined, helped by strong bank balance sheets and a reduction in bank holdings of “excess liquidity”. To support bank lending in the period ahead, bank balance sheets need to remain strong. Fiscal adjustment and a reduced reliance on banks to finance the budget deficit would support credit provision to the private sector.
Keywords:
WP; private sector; government bond; Bank credit; macro-financial linkages; fixed-effects panel model; oil price; bank credit growth; bank balance; fed funds rate; oil price growth; Oil prices; Credit; Capital adequacy requirements; Excess liquidity; Global
Cover IMF Working Papers
Monetary Operations and Islamic Banking in the GCC: Challenges and Options
Ms. Ritu Basu
,
Mr. Ananthakrishnan Prasad
, and
Mr. Sergio L. Rodriguez
The assessment provides evidence of market segmentation across Islamic and conventional banks in the Gulf Cooperation Council (GCC), leading to excess liquidity, and an uneven playing field for Islamic banks that might affect their growth. Liquidiy management has been a long-standing concern in the global Islamic finance industry as there is a general lack of Shari’ah compliant instruments than can serve as high-quality short-term liquid assets. The degree of segmentation and bank behavior varies across countries depending on Shari’ah permissibility and the availability of Shari’ah-compliant instruments. A partial response would be to support efforts to build Islamic liquid interbank and money markets, which are crucial for monetary policy transmission through the Islamic financial system.This can be achieved, to a large extent, by deepening Islamic government securities and developing Shari’ah-compliant money market instruments.
Keywords:
WP; bank; central bank; asset; market; liquid asset; Islamic Banking; GCC; Monetary Operations; conventional bank; participation paper; banking assets; Omani bank; asset share; banks ratio; return on assets; Money markets; Islamic finance; Liquidity management; Global
Cover IMF Working Papers
An Overview of Islamic Finance
Mr. Mumtaz Hussain
,
Asghar Shahmoradi
, and
Ms. Rima A Turk
Islamic finance has started to grow in international finance across the globe, with some concentration in few countries. Nearly 20 percent annual growth of Islamic finance in recent years seems to point to its resilience and broad appeal, partly owing to principles that govern Islamic financial activities, including equity, participation, and ownership. In theory, Islamic finance is resilient to shocks because of its emphasis on risk sharing, limits on excessive risk taking, and strong link to real activities. Empirical evidence on the stability of Islamic banks, however, is so far mixed. While these banks face similar risks as conventional banks do, they are also exposed to idiosyncratic risks, necessitating a tailoring of current risk management practices. The macroeconomic policy implications of the rapid expansion of Islamic finance are far reaching and need careful considerations.
Keywords:
WP; bank; Shari'ah; monetary policy; banking assets; equity capital; Islamic Finance; Islamic Banking; Financial Stability; Sukuk; rate of return; bank management; profit sharing; profit-sharing financing; bank act; central bank certificate; profit share; assets data; conventional bank; Financial sector stability; Liquidity management; Open market operations; Global
Cover IMF Staff Country Reports
Qatar: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
Qatar has recently taken steps toward introducing a medium-term budget framework (MTBF) to enhance the predictability of spending decisions in the country. However, implementing medium-term fiscal planning requires formal procedural fiscal rules and parallel efforts to enhance the credibility of the annual budget. Given Qatar’s significant exposure to hydrocarbon price movements and its long-lasting hydrocarbon reserves, such fiscal rules would need a certain degree of flexibility and, at the same time, should be set to maintain consistency with long-term fiscal sustainability.
Keywords:
ISCR; CR; budget; Qatar; bond market; central bank; liquidity surplus; QCB liquidity forecasting model; liquidity management framework; market infrastructure; T-bill auction; fixed income; Government securities; Budget planning and preparation; Liquidity; Securities markets; Global; Liquidity management