Interview: Abdellatif Jouahri
What changes are we likely to see resulting from Morocco’s new Banking Act?
ABDELLATIF JOUAHRI: The act opens new perspectives for the sector’s development, in line with promoting economic growth and financial inclusion. The integration of participation banks is one of the act’s main contributions. This new activity should contribute to the diversification of funding sources and allow greater mobilisation of public savings.
The act also incorporated authorisation for non-banking entities to provide payment services and open payment accounts. This should enable the development of innovative means of payment, such as mobile financial services, to reach a population that is not well served. The law also defines the services that may be exercised by banks or specialised institutions, and fills the legal vacuum that surrounded the provision of investment services.
The act strengthened bank governance rules and established a macro-prudential supervision framework, particularly for systemic risks and financial institutions. The regime for dealing with banking difficulties and resolutions was also strengthened, as well as the protection framework for customers that obliges banks to adhere to mediation resolutions.
How do you envisage participation banking activities starting up in Morocco?
JOUAHRI: This sector can be a pillar for the development of financial activity and the promotion of financial inclusion. It will also be a new offer in Casablanca Finance City, and will help stimulate economic activity. BAM envisions participation finance being introduced through a progressive approach that takes into account Moroccan banking sector equilibrium and draws on international best practices and standards. With the new Banking Act, which included a whole chapter on participation banks, Morocco adopted a legal framework for these activities. This will be completed by regulatory texts relating to the prudential, accounting and governance aspects. BAM took part in the amendment works on the dahir concerning the High Council of Ulemas to create the Sharia Committee for Participation Finance, which will play an important role in labelling products and services. The new text of this dahir was published recently. We also took part in the amendment of the Insurance Code to include provisions for takaful (Islamic insurance).
What regulation is currently in place for new systems and means of payment?
JOUAHRI: BAM is responsible for all measures to facilitate fund transfers and oversee the functioning and security of payment systems and instruments. The supervision of financial market infrastructures (FMIs) is achieved through permanent monitoring and on-site assessments led by the central bank. Financial stability is a new fundamental mission of the central bank, and requires ensuring the resilience of the FMIs as well. Indeed, the regulation of FMIs improves the smooth functioning of payment systems by encouraging their managers to use the latest technology to enhance efficiency and service quality for users. The adoption of new technologies that evolve quickly is recommended by the regulators to reduce settlement times and processing costs, and to increase the security, efficiency and resilience of payment systems. BAM also aims to expand the range of innovative solutions tailored to users’ changing needs, to stimulate competition and to adapt the regulatory framework to the changes and developments of next-generation payment instruments.
New technologies offer significant potentialities at a lower cost. The regulatory framework should not overshadow the contribution of research and development – as well as financial innovation – in providing a payments market that can promote the entrance of new operators able to target untapped niches and exert downward pressures on pricing.
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