Global uncertainty poses challenges for financial systems and emerging markets
Saudi Central Bank Governor Ayman M Al-Sayari highlighted the implications of global uncertainty for international monetary and financial systems at the AlUla Conference for Emerging Market Economies on February 8, 2026. He identified geopolitical fragmentation, rapid technological change, commodity price volatility, and the growth of non-bank financial intermediation as key drivers.
Four pillars of global financial uncertainty
Governor Al-Sayari identified four key drivers of global uncertainty impacting financial systems: geopolitical fragmentation, rapid technological change (especially AI), commodity price volatility, and the significant growth of non-bank financial intermediation (NBFI).
The NBFI sector has now surpassed the banking system in size, accounting for over 51% of the financial system, which has begun to weaken market sensitivity to policy signals.
This environment has led to episodes of equity stress, propagating through mechanisms like margin calls and collateral haircuts.
Emerging markets face inherent structural and institutional vulnerabilities, limiting their capacity to absorb shocks.
Geopolitical tensions, trade fragmentation, and elevated debt levels are critical challenges for policymakers in these economies.
Persistent trade tensions risk accelerating inflationary pressures, dampening export revenues, and weakening future growth, complicating the policy environment and increasing capital flow volatility.
Resilience strategies and the dollar's enduring role
Governor Al-Sayari outlined two key characteristics differentiating resilient from fragile economies: the presence of coherent domestic monetary, fiscal, and financial policy frameworks supporting counter-cyclical responses, and the creation of effective shock absorbers through adequate foreign exchange reserves and greater financial market depth.
He highlighted Saudi Arabia's own resilience, citing adequate reserve buffers, counter-cyclical policies, and a pegged exchange rate that has preserved price stability, with inflation remaining below 3% for the last five years.
Addressing de-dollarization, Al-Sayari described it as a gradual reconfiguration and routine diversification, not a loss of the dollar's status.
The US dollar continues to dominate global foreign exchange reserves at 57% and 89% of FX transactions as of late 2025, and is likely to remain central to the international monetary system due to its strong market liquidity and robust legal framework.
Navigating interconnected risks
Governor Al-Sayari's speech offers a comprehensive overview of current financial vulnerabilities from an emerging market perspective.
His emphasis on international cooperation and shared learning is crucial for navigating these complex, interconnected risks, especially given the rapid growth of non-bank financial intermediation.
The detailed defense of the dollar's enduring role also provides a pragmatic counterpoint to popular narratives of its decline.