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Written by  Author |   Fri, 27 July 2012 11:11

Qatar Central Bank and Bloomberg launch Qatar Interbank Rate "QIBOR"

Qatar Central Bank (QCB) and Bloomberg have partnered to launch the first ever Qatar Interbank Offer Rate (QIBOR) fixings, in a move aimed at encouraging a more active interbank market in Qatar. Interbank rate fixings are used around the world to provide a daily reference point for banks borrowing unsecured funds from other banks in the local wholesale banking market and this announcement brings Qatar into that market for the first time.

QIBOR, which will use the contributed offer rates quoted by 9 panel banks, will be calculated by Bloomberg and published on the QCB website and Bloomberg Professional service starting from 6 May 2012 at 10:00 am Doha local time and each subsequent business day at the same time. QIBOR fixings for 8 different tenures ranging from overnight to one year will be publicly available each business day making market activity transparent to other banks around the world.

HE Sheikh Abdulla Saoud Al Thani, Governor of Qatar Central Bank, commented, "In establishing the first-ever benchmark interbank rate in Qatar it was vital that we worked with a partner with deep expertise and credibility in this area. Bloomberg is the market leader for financial data and extending our relationship with them will help position Qatar as a growing force in the global financial markets."

The list of member banks representing the largest local and international banks currently participating in the Qatar interbank market and present on the QIBOR panel includes:

  1. Qatar National Bank
  2. Commercial Bank
  3. Doha Bank
  4. Al Ahli Bank
  5. International Bank of Qatar
  6. Al Khaliji Bank
  7. Arab Bank
  8. Standard Chartered Bank
  9. BNP Paribas

Jean-Paul Zammitt, Global Head of Product Development for the Bloomberg Professional service, commented, "With the launch of QIBOR, the Qatar Central Bank is progressively promoting interbank activity in its maturing market. Bloomberg promotes transparency and we continue to work closely with central banks to support and develop their local markets."

Methodology:

QIBORrates are based on offer rates quoted by the 9 panel banks .The banks contribute rates that best represent interbank offers in a reasonable market size. The QIBOR fixings are an average of contributed rates excluding the highest and the lowest rate for each tenor.

The QIBOR fixings is calculated by Bloomberg and published on the Qatar Central Bank website and on Bloomberg at 10:00am Doha time on each Qatar Business day

QIBOR rates are calculated at 5 decimal places for the following maturities: 1day(o/n) , 1 week,1month,2month,3month,6month,9month and 1year

The fixing rates are based on a convention of ACT/360 and two-day settlement with the following value dates:

Example on Qatar Interbank Offer Rates:

Tenor  Value %ChangePrevious  Date
O/N             0.75714 0.00000        0.75714             05/28
1Week 0.82857         0.00000        0.82857             05/28
1Month 0.94286            0.00000  0.94286 05/28
2Month 1.06429          0.00000  1.06429 05/28
3Month 1.22857          0.00000  1.22857 05/28
6Month 1.40714         0.00000  1.40714  05/28
9Month 1.61429       0.00000  1.61429   05/28
1 Year 1.74286           0.00000  1.74286          05/28

Source: Bloomberg

Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company's strength – delivering data, news and analytics through innovative technology, quickly and accurately - is at the core of the Bloomberg Professional service, which provides real time financial information to more than 310,000 subscribers globally

Qatar Central Bank (QCB) works within the framework of the Decree Law No. 33 of 2006, which provides the objectives and functions of the QCB as follows:

1. Stability of Riyal exchange rate and its capability of being exchanged for other currencies.

2. Stability of commodities and services prices.

3. Financial and banking stability.

4. Other macroeconomic and development objectives consistent with the State policy and the objectives mentioned above.

In its quest to achieve the foregoing, Qatar Central Bank maintains a balance between local and external considerations in order to avoid imbalances and instability, through:

A. Layout and enforce the State monetary policy, policy of the exchange rate and financial and banking supervision.

B.Take appropriate measures to counter global, regional and local, economic and financial disturbances and strive to detect the dangers that threaten the financial system as a whole, and reduce the repercussions of the same.

C. Strengthen the infrastructure of assisting central banking services systems i.e., payment systems, clearance, credit bureaus and others, including the QCB's role as lender of last resort.

D.Regulatemonitors, supervise and develop the banking business, and enhance its efficiency, so as to achieve monetary and financial stability.

E.Notify the Council of Ministers of any factors which may endanger the financial or banking stability and propose the relevant policies.

QCB's Role in Promoting Financial Stability

Qatar National Development Strategy 2011-2016 indicates that development mainly relies on four pillars, one of them being sustainable economic prosperity. In this regard, one of the challenges stated in Qatar National Strategy 2030 resides in "selecting and managing the path which helps to achieve prosperity and avoid economic imbalances and unrests". Providing economic stability is a prerequisite to urge investors to make long-term commitments to expand the productive base.Any economy is inevitably exposed to crises, chronic or long-term fluctuations, including extreme financial distress situations, which may adversely affect economic activity. The State of Qatar may be one of the few countries where the fluctuation waves did not result in undesirable consequences, as it was the case in some economies, which essentially rely on natural resources exports. Through its national vision and development strategy, the Qatari government is fully aware that, if development is slowed down in the hydrocarbon resources sector, the sound macroeconomic policy supporting a stable environment will play a crucial role in the expansion and prosperity of the non-hydrocarbon sectors. In this regard, and in line with the State's policy, vision and strategy, QCB seeks to promote and maintain financial stability in Qatar through the adoption of a two-pronged policy:

The first axis is geared towards preventing the system from being exposed to unacceptable risk levels. Preventive measures emphasize regulation and supervision of banks and other financial institutions on a regular basis, so as to facilitate early detection of weaknesses in the financial system.

Despite supervision and vigilance of the highest order, it is impossible to completely cushion the financial system against all types of risks. Therefore, the second axis is remedial in nature as it seeks to contain the crisis at the earliest possible and prevent contagion.

Qatar's QIBOR is one move in a line of many aiming at covering all the bases needed to bring the country in line with best international business practices. While not trying to invent the wheel (why should it?), the country is certainly spinning its economic wheels forwards in a safe and calculated manner, fitting the sound national vision steered by Qatar's unique cadre of leaders.

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