Interview: Phillip Thorpe
The head of the Qatar Financial Center Regulatory Authority discusses the challenges faced by the global financial services industry.
May 7, 2010 9:48 by shafeer
There are plans by the government to help the issue of liquidity in the country. So there are distinctions and we think there’ll be lessons learned from Dubai, but perhaps they’re not that complicated. We are seeing a little bit of the consequence of a major property price adjustment in Doha, but for us that’s actually turning out to be both good and bad. Bad in the sense that property values are coming down, but good because we had quite significant inflation problems from rising property prices. In Doha we have a normal growth problem which is population increasing at a very rapid rate. Some say about 1 percent per month. Housing stock, it has not been keeping pace, so pressure on prices was considerable over 2007, 2008, and 2009. We’re now reaching to a point where some of the construction that was occurring in ’08 and ’09 is coming on the market and prices are coming down. To my mind, that’s a natural adjustment, that’s something to be welcomed, not to be worried about. And we are not really looking at the same scenario on property as you may be seeing in Dubai. We may have an over-supply for a short period, but I think with the basic population growth, prices will stabilize again.
What kind of changes are you seeing as a regulator?
We’re doing well. I suspect most regulators all around the world are doing well, which is why we’re examining whether the assumptions we made are still good. We’re very fortunate we’ve not seen any significant consequences from the economic crisis, but that hasn’t stopped us looking at the way we treat capital. It hasn’t stopped us focusing on whether firms have good risk management systems. It certainly made us look very closely at the quality of human resources, and we are watching very closely the changes that are being proposed in other jurisdictions. One of our points of existence is that we are benchmarking the world’s best standards. If those standards are changing we need to consider what we need to do ourselves and make the changes that will follow. That’s a full-time job these days. But so far our analysis said we have a very robust financial services sector, the QFC environment has proven to be relatively immune. I think one of our pieces of good fortune is we are still at a fairly early stage of development. We have taken a very close look at the institutions we regulate, we’re very pleased with what we found in general, but we are very much aware that more change will be required as international standards change.