The Arab Monetary Fund (AMF), the International Monetary Fund (IMF) and the World Bank Group are pleased to announce the publication of a report on the findings of a survey on the withdrawal of Correspondent Banking Relationships (CBRs) in the Arab region. This survey, which was undertaken from February through June 2016, aimed to assess to what extent banks operating in the Arab region have seen terminations and/or restrictions of their CBRs over the past four years (2012-2015), to identify the underlying causes, and to collect evidence on how this withdrawal has affected banks’ products and services and their client segments.
The report is the result of a continued and collaborative engagement by the AMF, IMF, World Bank Group, and the Central Banks in the Arab region. The report synthesizes the findings of the survey and highlights some key issues and policy questions that should be addressed to mitigate the impact of the withdrawal of CBRs on banks operating in the Arab region.
The report notes that the decline in CBRs, experienced by banks in the Arab region, significantly affects banks’ ability to service certain client segments and to provide certain products, as well as to conduct foreign-currency-denominated capital and current-account transactions. The report also highlights the need to pursue further efforts to strengthen regulatory regimes, as well as to establish and maintain an open dialogue and regular discussions among regulators in the jurisdictions involved.
The report does not intend to provide an exhaustive overview or detailed quantitative data on correspondent banking practices in the Arab region. In addition, a quantitative discussion of the economic effects of the withdrawal of CBRs was outside the scope of this report. Nevertheless, the results of this survey make an important contribution to the continung policy debate regarding the need for and design of solutions to the challenge created by the withdrawal of CBRs.
In this regard, AMF, IMF and World Bank Group stand ready to support further efforts in addressing CBRs issues in the Arab region in cooperation with the Central Banks in the region, and according to each institution’s mandate and expertise.