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Wednesday, 26 July 2017

Potential central bank oversight of non-banking financial sector in proposed legislative changes stirs new controversy

New controversy around clauses on central bank oversight of non-bank financial sector in proposed amendments to the CBE and banking acts: The financial sector is in a modest uproar over proposed amendments to the Central Bank and Banking acts that would give the central bank oversight on non-bank financial institutions and brokerages. (That uproar would be more intense were half the community not on Sahel or in Europe / the US / Canada at the moment.) Article 21, which as we noted on Monday would give the CBE more sway over non-bank financial services by granting it the authority to issue licenses, would also give the central bank a say in regulating the sector, a role currently reserved to the Egyptian Financial Supervisory Authority (EFSA).

The Federation of Egyptian Banks (FEB) has reportedly called into question the constitutionality of the article, arguing that it infringes on the authority of EFSA, according to Al Mal. Egyptian Capital Markets Association board member Ayman Sabry took to the pages of the newspaper to also denounce the proposed changes, calling them an “unnecessary imposition of the CBE’s authority” on capital markets. The FEB has previously said it won’t accept changes that would give the CBE the power to impose term limits on bank managing directors.

EFSA is playing it cool: Unnamed officials from EFSA dismissed the current draft of the amendments as merely “preliminary,” saying they can only be taken as “suggestions.”

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