QCB’s high global reserves indicate its solvency: QEO


The international reserves of the Qatar Central Bank (QCB) constituted 624% of currency issued in November 2021, well above the mandated 100%, indicating the solvency of the central bank, according to the Qatar Economic Outlook.
The level of total international reserves and foreign exchange liquidity stood at QR 209.6 billion as of November 2021, or USD 57.6 billion, of which about 72.9 percent is official reserves, the Authority said. planning and statistics in its perspectives.
During the period from November 2020 to November 2021, the monetary base increased by an average of 14%, this increase stemming from an average increase of 4.4 percentage points in the currency issued, as well as an increase in commercial bank (other) deposits with the central bank by 2.4 percentage points (not including the reserve requirement or excess reserve).
The measures taken by the QCB to deal with the financial challenges faced by the Qatari economy during the period (2016 to November 2021), including the repercussions of fluctuations in oil and gas prices, the Gulf crisis and measures to contain Covid-19, led to an increase in its balance sheet of approximately QR 82 billion over the same period, or $22.5 billion, of which $11.8 billion since the start of Covid-19 (January 2020).
The report indicates that the management of domestic liquidity in 2020 was formulated on an increase in the monetary base of 28.6%, thanks to an increase in the currency issued by 8.1 percentage points and an increase in bank deposits. trade at the central bank by 20.5 percentage points. .
Regarding the measures taken by the QCB to deal with the repercussions of Covid-19 during the period April 2020-November 2021, they are quite different from the measures taken during the blockade in terms of the magnitude and rate of change, because the QCB increased its deposits with local banks during the first quarter of 2020 as a precautionary measure to counter any pressure on local liquidity.
However, at the same time, it increased its investments in foreign bonds and treasury bills at the expense of reducing its balances with foreign banks in an effort to keep official reserves in good standing.
The QCB continued to use these procedures as required; for example, in the first eleven months of 2021, the central bank increased its investments in foreign bonds and treasury bills from QR 85.9 billion in January 2021 to QR 105.7 billion in November 2021, in exchange for reducing its balances with foreign banks by QR 48. 5 billion in January 2021 to 29.8 billion QR in November 2021.
“As is often the case, it may be more profitable to invest in bonds and treasury bills rather than holding investments in deposits at low interest rates,” according to the outlook.
As for the increase in the currency issued, it may in turn reflect the increase in the value of gold reserves resulting from the increase in the revaluation account, a consequence of the increase in international gold prices.
As for the increase in commercial bank deposits, these are “excess reserves” and “other reserves” which are generally deposited at the QCB to benefit from its payment of interest while having them available to pay their contributions if necessary.

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