We should acknowledge that uncertainty or volatility is the name of the game and it has been so for quite a number of years, said Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA) at Daily News Egypt Awards & Summit last Wednesday.
He added that this happened due to the COVID-19 repercussions, excess liquidity in economies, and then contractionary monetary policy, which has been hurting both emerging and developed markets, and finally the Russia-Ukraine war and what is happening in the global financial sector.
And now we need to know the difference between what happened in 2008 and what we are seeing nowadays, the policy response that we are seeing today from the US Federal is quite alert to rescissions that are facing the economy.
“We can say we have a liquidity problem, but not a balance sheet problem and this is the main difference between what happened in 2008 and nowadays. Currently we have liquidity and pricing issues due to the mismatching in maturities of investments” said Farid.
How can the financial sector and non-bank financial sector help in the economy grows, we are talking about the capital market which provides capital through ownership to companies, and then we have a very important term which we should rely on the insurance sector across the different types of it, and Insurance should any person rely on to hedge the current uncertainties that we are facing from global or local Financial systems.
Insurance is not only related to property or asset insurance, it’s also related to life and life savings and the linkage between saving ratio and insurance saving towards investments in capital markets is one of the most important additions and reliabilities that insurance provides to different players.
They are planning at the regulatory body some investment criteria of private insurance investment, to expand the ownership in equities, they are the ultimate hedge and reflection of real economic growth rate and the most important aspect that we should see is comprehensive insurance.
The second component ensures in the long term to provide sufficient income and sufficient returns that will be able to grow in the future.
Going to microfinance and consumer finance that we regulate, we found like 5 million uses of microfinance and consumer finance as well the most important aspect when we look at the breakdowns of beneficial of those financing 64% in some iciness on an annual average basis, and around 58% of the uses of microfinance and consumer finance companies, they are women and here it gives u an indication of how we can rely on non-banking financial services at large to benefit the real light on the people who is living on the ground, cause most of these types of loans are usually be for productive uses.
And this is a supportive component of the real economy.
Ultimately when we look it’s not the first time to face those urgent times and it won’t be the last time to face them. The case is how we deal with those times and how to ensure financial solvency.
And to share the financial inclusion, even if it’s hard to achieve the targets we sure we will do it.