Jeddah, Kingdom of Saudi Arabia, 24 August 2023 - The Islamic Development Bank Institute (IsDBI) organized a public lecture on 17 August 2023 titled ‘The Changing Role of Central Banks in Times of Uncertainty,’ delivered by Dr. Ishrat Husain, a former Governor of Pakistan's Central Bank and Advisor to the Prime Minister.
Dr. Husain, a distinguished economist and experienced central banker, discussed the current global economic trends and challenges, and the heightened responsibilities of central banks during periods of economic turbulence and uncertainty.
He highlighted the need for collective action among governments, the private sector, civil society, academia, and financial markets to address the complex global economic challenges. He specifically emphasized the importance of bridging wealth gaps, investing in the younger generation, combating misinformation, and balancing climate and development financing.
Dr. Husain also shed light on the trade-offs faced by central banks, such as the need to balance curtailing inflation with preventing unemployment and managing fiscal deficits with financing development.
He highlighted the potential of Islamic finance for financial inclusion but expressed concerns about some current practices that do not fully adhere to the true ideals and principles of Islam. Dr. Husain called for stakeholder collaboration to address the issues so as to strengthen the role of Islamic finance in promoting sustainable economic growth.
On charting the way forward, Dr. Husain suggested that central banks develop expertise in data analytics and artificial intelligence to enhance surveillance and the ability to gather information from diverse sources. He emphasized the importance of incorporating black swan events in stress tests and addressing challenges posed by shadow banking and digital platforms. Additionally, he advocated for a proactive approach, coordinating monetary policy with regulatory measures, and improving communication with stakeholders.
Dr. Husain emphasized the need for central bankers to improve their communication with stakeholders and the public, as effective communication plays a vital role in maintaining stability and trust in the financial system.
Earlier in his introductory remarks, Dr. Sami Al-Suwailem, the Acting Director General of IsDB Institute and Chief Economist of the IsDB Group, highlighted the importance for central banks to explore new approaches in light of the continuous cycle of worldwide crises.
Dr. Mansur Muhtar, IsDB Vice President for Operations, highlighted the importance of the central bank's supervisory role and sovereign decisions, providing them more power and holding them accountable with openness and transparency.
A lively question-and-answer session explored the issues and challenges further with practical examples of solutions and ways forward for shaping the evolving role of the central banks.
Overall, Dr. Ishrat Husain's lecture served as a call to action for stakeholders to come together, find viable solutions, and navigate the global economy's complex challenges to foster inclusive and sustainable growth.
Dr. Zamir Iqbal, Vice President of Finance (Chief Financial Officer), in his closing remarks, acknowledged the significant contribution of Dr. Ishrat Husain to the IsDB and in promoting the Islamic finance industry in Pakistan. He thanked Dr. Husain for his contribution and collaboration with IsDB in various capacities.
The full session is available on YouTube here: https://www.youtube.com/watch?v=E2567iJeLlw