AMF seeking to bolster trade and investment between Arab countries
Arab Monetary Fund to create clearing and settlement entity
The Arab Monetary Fund (AMF) will establish an independent regional entity for the clearing and settlement of intra-Arab payments in order to help bolster trade and investment between Arab nations
“The objective of the entity is to promote the use of local currencies intra-Arab payments clearing and settlement transactions, alongside main international trading currencies,” the AMF said in a statement on their website.
“This will help to contribute to reduce the costs and time associated with the cross-border payments operations and therefore promote investment and intra-Arab trade.”
The board of governors of the AMF approved the new entity, which will have a capital of $100 million, at its 41st session held on April 10 at the Dead Sea in Jordan. The approval came after a feasibility study, the AMF said.
Abdulrahman Al-Hamidy, director general of the AMF, said the project will boost trade and investments between Arab countries. It will also spur commerce between Arab countries and their main trading partners. The entity will offer value added service to central banks, commercial banks and exchange houses in the Arab region, Mr Al-Hamidy said.
Arab central banks are committed to supporting the project throughout the whole development of the new entity and that the AMF will work closely with the central banks until it goes live. The AMF didn’t say when that would be.
Trade and investment between Arab countries has traditionally been low and the dearth of investment between Arab countries is particularly hurting the growth of small and medium-sized enterprises (SMEs) in the region who as a result find themselves with a 300 per cent funding gap, AMF said.
Funding such SMEs has become more difficult in the aftermath of the 2008 global financial crisis.