By Sarah Townsend
Arab Monetary Fund chairman says provision of unjustifiably large loans can have fatal repercussions for global economy
The boss of the Abu Dhabi-based Arab Monetary Fund (AMF) has urged banks to take steps to curb “excessive” lending, warning this could cause economic crisis.
Dr Abdulrahman Al Hamidy, director-general and chairman of the AMF, said the provision of unjustifiably large loans and financial facilities could have negative consequences for the local and global economy, of the sort that caused the global financial crash in 2008.
State news agency WAM quoted Al Hamidy as saying: “Risks that banks are facing because of expansion in lending have negative effects on the economy and this could cause severe financial and economic crises whose far reaching impact transcends national economies to the global economy as it happened during the international financial crisis in 2008.”
The statement was made during a seminar organised by the AMF in collaboration with the Financial Stability Institute and Bank for International Settlements, and it was read out on his behalf by Dr. Saud Albrikan, director of the AMF’s Economic Policy Institute.
In his statement, Al Hamidy underlined the importance of supervision on banking activities and the need for flexible regulations to ensure banks are doing their job properly and driving economic growth.