The Central Bank of Bahrain (CBB)

The Central Bank of Bahrain (CBB)

The Central Bank of Bahrain (CBB) was published by the 2006 CBB and Financial Institutions Law on September 6, 2006 and serves as a public corporate entity. The main responsibilities of the CBB are ensuring the financial and monetary stability of the Kingdom of Bahrain.

The predecessor of the Central Bank of Bahrain (CBB) is the Bahrain Monetary Agency (BMA) that had been published in 1973 and had been carrying out the functions of central banking and regulations. The BMA transferred its 33-year record of successful activities and responsibilities to the CBB. Now, the CBB is responsible for the implementation of the Kingdom of Bahrain’s monetary and foreign exchange rate policies, management of governmental reserves and debts, issuance of the national currency and administration of the payments and settlements systems of the country. The CBB also has the mission of being the only regulator of the financial sector in Bahrain which means it covers industries of banking, insurance, investment and capital markets.

Gathering a broad scope of responsibilities under the umbrella of the Central Bank of Bahrain (CBB) creates a consistent approach in the financial policymaking and the whole financial sector of the Kingdom. The businesses operating in financial services in Bahrain can benefit from a straightforward and effective regulatory framework.

 The Objectives of the Central Bank of Bahrain (CBB)

 In the Article 3 of the Financial Institutions Law 2006, the objectives of the Central Bank of Bahrain are defined as:

  • Defining and implementing monetary, credit and other financial industry policies for the Kingdom of Bahrain
  • Providing efficient main banking services to the Government and financial industry of the Kingdom
  • Improving financial industry and boosting confidence within the sector
  • Guarding the interests of the depositors and customers of the financial institutions, and enriching the credibility of the Kingdom as a global financial center.

Licensing and Supervision

 The roles of the CBB also contain licensing and supervision of banks (conventional and Islamic), insurance service providers (insurance companies and brokers), investment business licensees (investment companies, clearinghouses and their member firms, licensed exchanges, money brokers and investment consultants), and other financial service providers (representative offices, finance firms, money exchangers and ancillary service providers).

Bahrain’s licensed exchange and clearing houses also fall under the scope of the CBB for which the CBB performs the role of the Listing Authority. The management of Bahrain’s capital markets is also regulated by the CBB.

Regulatory requirements of the CBB

The CBB takes the relevant international standards as the basis for its supervision. Therefore, the CBB requirements apply the Core Principles and other standards of the Basel Committee, the International Association of Insurance Supervisors and the International Organisation of Securities Commission for banks, insurance service providers and investment business service providers in the Kingdom of Bahrain.

The nature of the CBB requirements is being risk-focused and principle-rooted. The various categories of the licensees and the changeable disposition of supervisory risks they may pose are also taken into consideration. The CBB requirements combine both the commonsensical standards and the business conduct.