Dr. Savaş Alpay, Director General of SESRIC, addressed the Governors of Central Banks and Monetary Authorities of the OIC Member Countries on 27 September 2010 during the opening session of the Meeting of Central Banks and Monetary Authorities of the OIC Member Countries-2010, which was jointly organised by the Central Bank of Turkey and SESRIC in Istanbul, Turkey.

During his opening statement, the Director General, stated that while economic recovery was underway across the globe and output growth rebounded better than expected in 2009, being the epicentre of the crisis, most of the developed and advanced economies were still under great economic and financial stress and their recovery was expected to remain slow. In this context, Dr. Alpay stated that during the crisis, many developed countries were forced to recapitalize banks, take over a large part of the debts of failing financial institutions and introduce large stimulus packages to revive demand. As a result, there was an explosion of their public debt.

However, as a group, developing and emerging economies suffered less down turn during the crisis and, thus, their economic prospects were more promising, whereas economic activity in many of these countries was expected to be relatively vigorous, mainly due to the strong domestic demand and recovering external demand. As a substantial part of the developing countries, the OIC Member Countries were also gradually recovering from the negative impacts of the crisis and the recession in the world economy of 2008-09. Due to virtually non existence of sub-prime market in the OIC Member Countries, the majority were only affected by the spill over effects of the crisis on their export earnings, remittances, aid and FDI.

Dr. Alpay, also stressed that the Islamic principles-based financial system had been recently more attractive in many countries around the world as many people came to argue that such a system, as a feasible potential alternative, could provide the solution to the weaknesses of the conventional financial system and, consequently, the global financial crisis could have been avoided if such a system had been in place instead of the conventional one. He also touched upon the fact that it had been recently reported that Islamic banks had been less affected than many conventional banks since they were not exposed to losses from investment in the so-called “toxic assets” such as CDOs and CDSs, adding that there was, undoubtedly, a promising potential for Islamic financial services to grow more at the global financial market in the near future.

While calling attention to the OIC Capacity Building Programme (CBP), Dr. Aplay added that SESRIC had been undertaking over the last three years based on the analyses of the needs and capacities of the member countries in the relevant areas through regular surveys, and matching these needs and capacities through sending experts among these countries to offer the needed training programmes. He also pointed out that within the framework of CBP, the Centre was also conducting the Central Banks Capacity Building Programme for the relevant institutions in member countries.

The Director General also informed the Governors of Central Banks and Monetary Authorities about a very important initiative of SESRIC: the Vocational Education and Training Programme for OIC Member Countries (OIC-VET), which has been initiated and designed by SESRIC, and officially launched by H.E. Abdullah Gül, President of the Republic of Turkey and Chairman of the COMCEC, at the COMCEC Economic Summit held on 9 November 2009 in Istanbul on the occasion of the 25th Anniversary of the COMCEC. In this connection, he expressed SESRIC’s readiness, to strengthen cooperation with the Central Banks and Monetary Authorities of OIC Member Countries in order to extend and enrich training programmes for more benefits to the member countries in this important area.

He concluded his remarks by stating that this meeting was an instrumental step towards improving and enhancing the level of cooperation and coordination among the Central Banks and Monetary Authorities of the OIC Member States, the institutions which played the most important role in achieving the macroeconomic stability in the economies of the member countries.

The Governors of the Central Banks and Monetary Authorities of OIC Member Countries evaluated the latest financial and economic developments in the world, and their implications for OIC Member Countries. In this regard the Governors clearly committed themselves to strengthening their efforts towards enhancing the level of cooperation and coordination among their institutions to mitigate the negative impacts of global financial crises and shocks in international financial markets on their economies.

The Governors also extensively discussed and deliberated on the most pertinent issues related to payment systems and capacity building of financial institutions in OIC Member Countries, and underlined the significant role of cooperation on having effective operation, regulation and oversight of payment systems in individual member countries and harmonisation of the legal systems in this regard.

Having been inspired by the agreements reached during the meeting, the representatives of the Central Banks and Monetary Authorities of the OIC Member Countries adopted the Final Communiqué in which they recognised the significant role of payment systems in maintaining financial stability through increasing the effectiveness of monetary policy and expressed willingness for further cooperation to learn from each other’s experience about innovative payment instruments. The meeting also affirmed the need for strengthened cooperation among the institutions in the area of capacity building by exchanging knowledge and experience, and participating in the ongoing programmes, such as Central Banks Capacity Building Programme developed and managed by SESRIC through matching the needs and capacities of central banks by regularly conductedsurvey.

Governors of Central Banks and Monetary Authorities of OIC Member Countries are convened regularly on annual basis for the purpose of sharing experiences on financial policies and central banking in order to catch up with the world’s agenda and follow up global trends and developments as well as to improve and enhance the level of cooperation and coordination among the Central Banks of the OIC Member Countries. SESRIC is a member of the secretariat of the meeting to organize coordination with the OIC system.

The previous meeting in 2009 was organised when the world economy was still suffering the negative impacts of the global financial crisis which manifested in continuous slowdown of economic growth and high unemployment rates in many countries around the world. The Meeting worked out for the institutionalization of this SESRIC initiative, supporting the efforts of the OIC Member Countries to mitigate the negative impacts of global financial crises and shocks on their economies.

The Meeting of Central Banks and Monetary Authorities in 2011 and 2012 will be chaired by Malaysia and Saudi Arabia respectively.

Documents

“Final Communiqué” adopted by the Meeting of the Central Banks and Monetary Authorities of OIC Member Countries (English) (Arabic) (French)