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Tuesday 10 December 2019

Central Bank's Governor Underlines Disruptive Implications of Digital Transformation on African Financial Sphere

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Central Bank's Governor Underlines Disruptive Implications of Digital Transformation on African Financial Sphere

Governor of Morocco's central bank (Bank Al-Maghrib), Abdellatif Jouahri, underlined Monday in Rabat the disruptive implications and impacts of digital transformation and technological innovations on the African financial sphere.

Speaking at the third High-Level Regional Symposium on Financial Stability, Jouahri said that the Fintech and Insurtech impetus, the use of Big Data, the alternative financing methods “crowdfunding”, mobile banking development, as well as the use of Blockchain technologies are all examples illustrating the substantial incursion of these innovations in the banking, insurance and capital markets sectors.

The risks arising from these disruptive technologies have increased sharply due to the enhanced and expeditious digitalization of financial services, he pointed out, noting that these particularly include the risks of using IT platforms for money laundering and terrorism financing, consumer protection and the resurgence of cyberattacks targeting the financial sector.

In Morocco, financial authorities have, in 2018, elaborated a roadmap to monitor cyber risks in the national financial system, in light of the international standards, Jouhari said, adding that in this context, a diagnosis of cyber security maturity at financial institutions is being prepared pursuant to a collaborative approach among the three regulators.

Moreover, Jouahri underlined that climate change is a critical vulnerability area for the financial sector.

"As such, the physical risks caused by the increasingly repeated climate disasters and those associated with the transition to a low-carbon economy, notably when abrupt and unordered, can lead to important disruptions and financial losses which could hamper the resilience of the financial sector."

Consequently, financial regulators are, under their financial stability mandate, called upon to set up climate risks mapping, though still in the making, he said.

"They are thus required to gradually improve their approaches as to identifying and measuring the financial sector’s exposure to such risks."

Furthermore, the last financial crisis of 2008 revealed the necessity to prevent, manage and regulate risks related to bankruptcy of financial institutions, considered until then «too big to fail», he said.

For his part, Governor of the National Bank of Rwanda and Chairman of the Association of African Central Banks (AACB), John Rwangombwa, said that African institutions must act together to make African integration a real asset to build safer and more resilient African financial systems.

He recalled in this regard the recent conclusion of the agreement creating an African Continental Free Trade Area.

The meeting was organized by Bank Al-Maghrib in close coordination with the Ministry of Economy and Finance, the Moroccan Capital Markets Authority (AMMC) and the Supervisory Authority of Insurance and Social Welfare (ACAPS).

Scheduled every two years, the event is held with the support of the Financial Stability Board (FSB) and the involvement, on a regular basis as of this third edition, of the Association of African Central Banks (AACB).

The event brought together high-level representatives of the International Association of Insurance Supervisors (IAIS), the International Organization of Securities Commissions (IOSCO), the World Bank and other international financial regulators.

Nearly 100 participants took part in this meeting, including over 40 senior representatives of central banks and other authorities from across the African continent, as well as some 40
high-level officials representing the Moroccan financial sector.

The event focused on the latest developments in the action of the FSB, AACB, IAIS and IOSCO and highlighted the opportunities and risks relating to financial integration in Africa, in the context of the implementation of the African Continental Free Trade Area (AfCFTA).

MAP 10 December 2019