Bahrain Eyes Future of Financial Sector with Evolving Regulatory Framework
===========================================================
Bahrain’s financial regulatory system has been praised for its ability to balance innovation with stability, enabling the country to establish itself as a major player in the GCC’s financial sector. At the heart of this framework is the Central Bank of Bahrain (CBB), which serves as the sole regulator for financial services.
A Consistent and Holistic Approach
Bahrain’s regulatory system has a decades-long track record of ensuring a stable operating environment, allowing businesses to thrive with consistent regulation and a holistic approach to managing risk across the sector. This approach gives businesses the freedom to locate anywhere in the country, reducing operating costs.
Enabling Innovation
The CBB played a key role in Bahrain becoming the first regional hub for wholesale banking in the 1970s and paved the way for the country to become a pioneer in the regional funds and insurance sectors. In recent years, Bahrain has continued to evolve its regulatory framework to support the growth of FinTech.
Key Developments:
- The introduction of a regulatory sandbox allowed firms to experiment with new products and services in a controlled environment.
- New regulations enabled crowdfunding in both conventional and shari’a-compliant finance.
- New company structures, including investment limited partnerships, protected cell companies, and enhanced trust laws, have been introduced.
Enhancing Financial Stability
As Bahrain looks to build on last year’s work, it continues to prioritize regulatory reforms that can enhance financial stability and open new opportunities for investors. Among its priorities are:
Key Reforms:
- Enhancements to existing crowdfunding regulations
- New rules to support regtech
- A new bankruptcy law to make it easier for entrepreneurs to experiment
- Regulations to support the development of blockchain
Supporting Global Islamic Finance
The CBB has also been at the forefront of developing standards and regulations for the global Islamic finance sector, helping to turn it into a $2tn industry. Bahrain’s regulatory framework is set to continue evolving in response to the growing needs of the financial sector, ensuring that the country remains a major player in the GCC’s financial landscape.
With its commitment to innovation, stability, and growth, Bahrain is poised to remain a leading financial hub in the region.