The Banking Executive Magazine - September 2025 Issue

Rising up to The Global Challenges Institutions like the Green Climate Fund and World Bank are more spe- cialized in climate-related financing. If the IMF doesn’t scale up its climate tools, it risks losing relevance in this space. The IMF is still catching up on regu- lating digital currencies, fintech, and AI-driven economies. Tech-savvy institutions or coalitions may take the lead in shaping digital financial governance. If the IMF fails to reform its quota sys- tem and governance structure, emerging economies may push for parallel institutions that better reflect their interests. ROAD AHEAD FOR ARAB COUNTRIES Global finance does not need an- other IMF clone, it needs comple- mentary institutions that fill gaps the IMF can’t or shouldn’t. Below are tar- geted, practical recommendations to design such institutions so they rein- force, not fragment, the system. We propose a strategic roadmap for Arab countries seeking to establish their own regional International Arab Monetary Fund to complement the role of the IMF. This could ultimately enhance financial sovereignty, re- silience, and cooperation across the Arab world. Key steps along this strategic roadmap are: Step 1. Defining the Arab International Monetary Vision • Regional resilience: Tailored support for Arab economies facing debt, inflation, or currency instability. • Policy autonomy: Reduce reliance on external insti- tutions with rigid conditionality. • Shared priorities: Align financing with Arab develop- ment goals including youth em- ployment, food security, energy transition, and post-conflict recov- ery. Step 2. Defining the Arab International Monetary Mandate • Focus Areas: Macroeconomic stabilization, emergency lending, climate re- silience, and digital finance. • Avoid duplication: Complement, not compete with the Arab Monetary Fund (AMF), IMF, and World Bank. • Include fragile states: Ensure access for conflict-affected countries like Yemen, Sudan, and Syria. Step 3. Building a Strong Capital Base • Founding contributions: Tiered capital from Gulf Coopera- tion Council GCC, North African, and Levant countries. • Hybrid financing: Combine paid-in capital, guaran- tees, and callable funds. • Private sector role: Invite Arab sovereign wealth funds and banks to co-invest in resilience and infrastructure windows. Step 4. Adopting Inclusive Governance • Quota formula: Blend GDP, population, vulnera- bility, and paid-in capital. • Rotating leadership: Ensure representation from all sub- regions including Maghreb, Mashreq, Gulf, and Horn of Africa. • Transparency: Publish board minutes, program evaluations, and country score- cards. Step 5. Providing Flexible Lending Instruments • Emergency Stabilization Facility: Rapid disbursement for currency or fiscal crises. • Climate Resilience Window: Support adaptation, water security, and energy transition. • Digital Finance Facility: Help central banks regulate fin- tech, CBDCs, and cross-border payments. • Debt-for-reform swaps: Link concessional loans to measur- able outcomes in education, health, and governance. Step 6. Strengthening Surveillance and Technical Support • Arab Macroeconomic Dashboard: Real-time data on inflation, debt, reserves, and employment. • Policy labs: Regional hubs for fiscal reform, digital taxation, and green budget- ing. • Capacity building: Train ministries and central banks in risk management, debt sustain- ability, and climate finance. Step 7. Coordinating with Global Institutions • Joint country platforms: Align programs with IMF, World Bank, and Islamic Development Bank. • Crisis coordination: Synchronized action during re- gional shocks. • Legal harmonization: Standardize debt clauses, banking regulations, and digital finance rules. the BANKING EXECUTIVE 14 ISSUE 201 SEPTEMBER 2025