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Kuwait Enhances Banking and Capital Markets Sector

The Central Bank of Kuwait (CBK) has issued several regulations and guidelines to enhance the country’s banking and capital markets sector, aligning with international best practices. These developments aim to make Kuwait’s financial sector more sophisticated and competitive.

Key Developments

Electronic Payment Regulation

  • The CBK has updated its Electronic Payment Regulation to encourage innovation and support both existing institutions and startups.
  • This update aims to facilitate the development of new fintech products and services, promoting a digital economy in Kuwait.

Sandbox Framework

  • Introduced in 2018, the CBK’s Sandbox Framework allows companies to apply for and obtain approval to test innovative Fintech products in the Kuwaiti market.
  • The framework consists of four stages:
    • Application: Companies submit their applications for testing innovative Fintech products.
    • Evaluation: Applications are evaluated by the CBK, considering factors such as innovation, risk assessment, and compliance with regulations.
    • Experimentation: Approved companies can test their innovative Fintech products in a controlled environment.
    • Accreditation: Successful experiments lead to accreditation, allowing companies to launch their products in the market.

Digital Banking Guidelines

  • The CBK issued Digital Banking Guidelines along with an invitation for digital banks to submit applications until June 30, 2022.
  • Successful applicants will be granted initial approval, and their operations will be subject to certain requirements and measures.

CMA Resolution No 28

  • On February 22, 2022, the Capital Markets Authority (CMA) comprehensively amended Module 11 of the Executive Bylaws of the Capital Markets Law.
  • The amendment introduced new debt instruments and structures recognized in international financial markets, including:
    • Short-term bonds and sukuk
    • Sustainable bonds/sukuk
    • Social impact bonds/sukuk
    • Green bonds/sukuk

Kuwait’s Commitment to Enhancing Banking and Capital Markets Sector

These developments demonstrate Kuwait’s commitment to enhancing its banking and capital market frameworks to become more sophisticated and competitive with neighboring countries. The initiatives aim to accommodate the economic implications of recent global events, such as the Covid-19 pandemic and the oil and gas crisis arising from the Russian invasion of Ukraine.