Hassan Abdalla, governor of the Central Bank of Egypt, stated that artificial intelligence transformations offer opportunities to boost analytical and supervisory capabilities but introduce risks like regulatory fragmentation and cyber threats. He called for robust digital infrastructure and modern legislative frameworks to address them. These remarks came at a high-level meeting in Abu Dhabi on financial stability.
Hassan Abdalla, governor of the Central Bank of Egypt (CBE), addressed the 20th High-Level Annual Meeting on Financial Stability and Supervisory Priorities, held in Abu Dhabi and organized by the Arab Monetary Fund in cooperation with the Financial Stability Institute and the Basel Committee on Banking Supervision at the Bank for International Settlements. He noted that the global economy is navigating a complex transition featuring elevated inflation, volatile liquidity conditions, and rapidly shifting geopolitical dynamics.
In the Arab region, these pressures are intensified by high public debt levels and persistent fluctuations in exchange rates and oil prices, which impact public finances, economic activity, and investor confidence. Abdalla explained that central banks must now assume a broader role in safeguarding monetary stability, bolstering economic resilience, and developing flexible financial systems that support growth, absorb shocks, and maintain market confidence.
He highlighted the expansion of non-bank financial institutions, which now represent nearly half of global financial assets and drive market development and inclusion, yet demand more advanced, transparent regulatory frameworks to mitigate risks. Abdalla also discussed the rise of digital assets and stablecoins, whose value has doubled over the past three years and are gaining prominence in cross-border payments.
Regarding 2023's global banking stresses following the collapse of four banks, he pointed to causes including weak governance, poor risk management, unsustainable business models, and inadequate supervision. These incidents revealed shortcomings in traditional liquidity standards amid rapid digital withdrawals. Abdalla concluded that financial stability challenges are inherently cross-border, necessitating enhanced cooperation to build resilient Arab financial systems capable of managing risks while fostering innovation for sustainable development.