Hamad Al-Sayari: Financing a changing world Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, at the Euromoney Saudi Arabia Conference 2007: Financing a Changing World, Riyadh, 8-9 May 2007. *  *  *  I am pleased to be here today at this international gathering of experts who share a common interest in the economic development of Saudi Arabia. The theme of this Conference is "Financing a Changing World" and I intend to share with you my views on the role that the Saudi Banks and the Capital Market are playing in this regard. This gives me an opportunity to recap the important contribution of our banks and our growing capital market in channeling the financial flows to and from the Kingdom. I will also outline the future direction and challenges in this regard. In recent years, international fund flows have been affected by different phenomenon, including rising imbalances in trade balances originating from the export dominated economies in Asia, the pace of economic growth in developed economies in Europe and North America, and the volatile energy and commodity prices affecting all countries. Addressing the impact of these global phenomenon are causing significant challenges to the economies of all countries. For the Gulf region including Saudi Arabia, a major challenge is to ensure that the increased financial flows into the region are channeled efficiently to the most productive sectors of the economy and to profitable enterprises and projects.
It is gratifying that SAMA has achieved its objectives of its monetary policy. The average inflation rate has remained at less than 1 percent over the last 20 years, and these stable conditions have contributed to sustained economic growth of 3% over the period. The exchange rate of the Riyal has also been maintained over the period of Rls. 3.75 per US Dollar, while the rates of exchange against other major currencies have moved within manageable limits. These positive indicators together with the uninterrupted full convertibility of the Riyal since 1961 and no restrictions on payments from and to the Kingdom, have created a stable business environment for the private sector as also for the inflow of capital for domestic investment. Since its establishment in 1952, a major responsibility of SAMA has been to maintain financial stability and promote growth of the national banking industry. As far as SAMA's objective of maintaining a stable financial system, its achievements have been equally remarkable. SAMA has followed prudent policies aimed at creating a sound, stable, and efficient financial system. Such a system has been characterized by freedom of capital flows, open investment climate, availability of ample liquidity, competitive environment and a modern payment system. Over this long period, sound laws and regulations and timely supervisory actions have ensured that Saudi Banks have stayed strong with adequate capital, efficient management, fit and proper directors and managers and sound internal control systems.