1- Please read the attached chapters 1,2,3, attached, then think about this proposal for the chapter 4 of this research.
2- Take care as much as you can to write the chapter with full concentration on the topic and connect the chapter with the previous chapters to be in the same context and approach.
3- The format of references and the footnote and all aspects should be connected with the hall research.
4- This chapter should be in max 5000 word.
5- Feel free to add or drop any title you find that worth for the research.
Chapter 4: The practical’s solutions for Saudi Arabian Monetary Agency, Challenges and possibility
Introduction:
On the most of successful economy around the world; will find the exponential relationship between the strong or growth economy and existence of the effective and prudent laws. The best industrial banking needs to be aware of certain things to be in the safe side. The strong regulator in banking supervision with modern legal texts supports them on effectively applications. Then the transparency on the market with fairness of opportunities will lead the organisation to have great control on the banks. Therefore, the regulator will be independent to take all necessary steps to drive the banking organisation on the safe side.
According to the previous chapters of this research; indicate in clear vision to an importance for SAMA to amendment their banking laws and regulations without any interferences from the Saudi’s government. Obviously the Saudi’s economy depend on the Oil, so the market of oil is unstable, so this risk should push the government in Saudi Arabia to find the other resources of incomes to safe their economy. This development will cost the government of Saudi Arabia, to update the laws and regulations of the financial sector. The lessons of financial crises around the world should be consider when move step further to achieve the various type of investments on the financial sector not just the oil, and enhanced the strong economy of the country.
The Bank of England is good experience for SAMA to get some lessons, as chapter two of this research discussed the history and the difficulties were facing on the Bank of England side. In addition, the IMF and the World Bank’s recommendations should be the master plan for SAMA to update their laws.
In fact the process and the mechanism of the government of Saudi Arabia as a royal regime imposed some barriers to change or issue new laws or regulations under the umbrella of the Sharia law. The royal decrees which use on Saudi Arabia to issue the laws will take long process and challenges as well, that mean SAMA should be ready to convenience the decisions makers on the Sura council (Perelman). On the other hand the scholars of Sharia should be filtering the new amendments of the banking laws.
In this chapter will discuss the possible and practical solutions for SAMA to get the full independence as a central bank of Saudi Arabia. The first solution is update the legal text of Banking Control Law 1966, and how this way will put SAMA in great position to adapt the modern style of the banking industry. The second way will show some practical steps for SAMA to avoid these challenges will face them when start to update the BCL 1966, such as make memorandum of understanding between the Ministry of Finance and SAMA it will grant SAMA most of the authorities as a regulator of commercial banks without interference from the government. Thirdly, SAMA can issue some regulations will reduce the governmental interference on commercial banks such as the corporate governor regulations. The last solution the Saudi’s government establish independent entity to control and supervising the commercial banks like the UK when established the Financial Services Authorities then the transitions to divide the FSA into two bodies. This approach will grant the new entity the full authority to do their job with possibility to develop the organisation from time to time according to the necessity.
The Banking Control Law 1966 Amendment:
Under this title; it’s important to discuss and clarify some points as follow:
– Give the brief how the Kingdom of Saudi Arabia regime, as a royal family control the country, then move to the legislation resources on the Kingdom such as the Sharia law is an most important resource for Saudi’s legislation. In addition, clarify the regular process and procedures to issue on amendment any law.
– What’s the best practise for SAMA to convince the Saudi’s government to adapt these changes on the BCL 1966? It will be important to show how these changes will grant SAMA the full authorities as a central bank to enhance the banking industry then by default growing the economy’s development in Saudi Arabia as a member of G20, and the Saudi’s government play the main role on the global economy.
– SAMA should clarify to the Saudi’s government about these changes on the BCL 1966 came from the International Monetary Fund and the World Bank, as the BCL1966 old regulations it will be the important time to update it.
The Memorandum of Understanding between SAMA and the Ministry of Finance:
Under this title; it’s important to discuss and clarify some points as follow:
– It will be worth for the research to give brief in how this MoU in genera work in legal aspects and in practical method. Then, mention to why this MoU will be with Ministry of Finance, because they perform as main player on the investing of the fund of the Saudi Arabia. In addition, the Ministry of Finance owns huge number as shareholder on most of the commercial banks in the country, so it can be control on the bank’s board decisions. Finally, according to the legal text on BCL 1966 the minister of finance restricted SAMA to do their job on banking supervision without the permission from them, so that was the most important reason to discuss that on this research on chapter 1.
– Show how this model of solution will avoid the barriers will face SAMA on the first solution when they move to change BCL 1966. Also, mention to some MoU have signed between SAMA and the Capital Market Authority in Saudi Arabia
– Give some example in the UK when the Bank of England use like this agreement in technical affairs to provide the best environment on the banking market.
The Modern style of the Corporate Governance on the Banking Sector:
Under this title; it’s important to discuss and clarify some points as follow:
– Give comprehensive view about the corporate governance, and how this model work in UK and most of the strong economy’s on the world.
– Show SAMA effort as a central bank when issue the corporate governance regulations in 2014 http://www.sama.gov.sa/ar-sa/Laws/BankingRules/Corporate%20Governance%20%2024-2-2014%20(النسخة%20النهائية).pdf
– In addition, it is important to mention to the Powers and Responsibilities of Members of the Board of Directors of Saudi Commercial Banks (attached), and give overview about them.
– It will be great doing discuss how these regulation doesn’t reduced the governmental interference in commercial banks.
– How this corporate governance should band any governmental entity to participate on decisions making process in the commercial banks board, even these that invest on these banks.
The challenge will face SAMA to adapt the suggestions solutions:
Under this title; it’s important to discuss and clarify some points as follow:
_ Show the conflict on the banking industry between conventional, and Islamic banking products under Sharia law in Saudi Arabia, and how this step will open the doors for b big debates and arguments will effective on the legislation party on Saudi’s government.
– The routine on the process and procedures on the amendment steps will put SAMA under pressure to success to update the BCL1966 or not? And to what extent SAMA will be ready to submit draft laws for some aspects should be issue when update the BCL 1966 such as the payment system law, the bank insolvency law..atc.
– It will be worth for the research to show the Bank of England experience on these issue or similar to them.
Conclusion:
Show under this title the benefit for SAMA and Saudi’s economy in banking industry; if SAMA take these steps toward the independence.
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