CBB committed to enabling growth, innovation by financial firms, says Governor

Financial institutions operating from Bahrain are, thus, assured of a fair deal and an even-handed and transparent regulator, who is also responsive to the evolving needs of financial services providers, said Mr. Rasheed Al Maraj during a meeting with members of the US-Bahrain Business Council (USBBC), currently visiting Bahrain.

The delegation is led by Mr. James Godec, Chairman of the USBBC. They were accompanied to the meeting, held at the CBB, by H.E. William Monroe, US Ambassador to Bahrain, and Mr. Khalid Al Zayani, leading Bahraini businessman and President of the American Chamber of Commerce in Bahrain.

The meeting was also attended by a number of senior CBB officials, including Mr. Khalid Hamad, Executive Director, Banking Supervision, and Mr. Abdul Rahman Al Baker, Executive Director, Financial Institutions Supervision.

"Bahrain's financial sector has always been open to foreign banks and financial institutions and this has enabled us to establish a well-diversified financial centre, which represents a broad spectrum of business activities being carried out by financial institutions from around the world,"

said Mr. Al Maraj.

More recently, Bahrain has led the region in successfully implementing the single regulator model, which has enabled the CBB to apply similar standards of regulation and supervision to all financial services providers, be they banks, insurance firms or capital market players.

"We also do not favour the creation of special zones, so all financial institutions in Bahrain are assured of even-handedness and fairness in which we deal with them," said Mr. Al Maraj.

The CBB also champions a vision of innovation, which has led to Bahrain's recent emergence as a centre for excellence in Islamic finance.

"Having recognized early on the Islamic finance opportunity, Bahrain has been playing a pivotal role in shaping and driving the industry forward," said Mr. Al Maraj.

As a result, Bahrain has notched up a number of firsts in Islamic finance. In 2001, Bahrain became the first country in the world to develop and implement regulations specific to the Islamic banking industry, followed in 2005, by the first-ever comprehensive regulatory framework specific to Islamic insurance and reinsurance (takaful and retakaful) companies. The regulatory initiatives have been supplemented by pioneering work in developing and issuing Islamic bonds (sukuk).

"Our successes in the financial sector have, of course, been underpinned by sound, stable and forward-looking economic and fiscal policies," said Mr. Al Maraj. The broad economic reforms currently underway will provide a strong platform for further growth in the years to come.

The CBB will continue to maintain its existing monetary policy, centred on a peg to the US dollar, he said.

"Our monetary policy has served us well since we began the dollar peg about 20 years ago and, while the current dollar weakness may affect our foreign trade, overall it gives us some certainty over earnings and provides clear guidance to the business community," said Mr. Al Maraj.

Mr. Godec praised Bahrain's business model, particularly the regulatory environment for financial services.

"Bahrain is in many ways an example in the Gulf. The maturity and sophistication of the business model here gives us a very compelling reason to be here," said Mr. Godec.

He said the USBBC would return in September 2007 with a larger delegation.