Doha’s plan to unify the regulation of its financial services sector under a single body fell off the agenda in 2009, as the country tried to cope with the effects of the global financial -crisis. That was understandable and sensible.
Now that the storm has largely passed, those plans are being revived. But they also need to be revised to take account of the new financial environment.
The idea to unify the regulatory functions of the Qatar Central Bank, the Qatar Financial Centre Regulatory Authority and the Qatar Financial Markets Authority was first put forward in 2007 and was an attempt to ape the Financial Services Authority in the UK.
Back then, the UK was seen as having one of the best regulated financial services sectors in the world. The recent global banking crisis has exposed some deep cracks in that model.
The economic turmoil has also illustrated where power lies in Qatar. During the crisis, the central bank, along with sovereign wealth fund the Qatar Investment Authority, led efforts to stabilise the financial system with bailout packages of more than $6bn. This aid has meant Qatari banks have emerged largely unscathed from the crisis. But the success of the bailouts also means the other regulators face the danger of taking only a very minor role in the newly unified regulatory body, compared to that of Qatar Central Bank.
If this happens, it will worry businesses based at the Qatar Financial Centre (QFC), which have long wondered how the integration of the QFC with other regulators would affect how they do business.
Inevitably, to bring the entire financial sector into a harmonised regulatory framework will take time but, for now, far more clarity is needed to reassure banks and other institutions that the right lessons have been learned from the recent crisis.