Saturday, March 2, 2024
Editor's PickCentral Bank of Bahrain introduces payment oversight framework

Central Bank of Bahrain introduces payment oversight framework

Central Bank of Bahrain (CBB) has published the Financial Market Infrastructures (FMIs) and Payment Oversight Framework to, among others, promote innovation, enhance transparency as well as boost the reliability and resiliency of the Kingdom’s financial system.

The framework outlines key roles, objectives, expectations, powers, standards, approach and tools with regards to oversight in response to a fast-changing financial sector. The CBB intends to strengthen the legal basis of protecting settlement finality and netting arrangements through this document. In other words, to mitigate the financial risks associated with FMIs and payment systems.

The framework applies to payment instruments, payment channels, critical service providers, third-party payment providers, payment service providers, ancillary services, payment initiation, payment innovation, open banking and cyber resilience. The CBB has identified seven objectives for the framework (see Diagram 1).

Diagram 1: Objectives of the policy framework

Source: CBB

“The future of FMIs and payment systems is expected to continuously expand in scope and be driven by many developments that are likely to shape the future of FMIs and payments landscape. Hence, the oversight function is highly influenced by these developments, trends and standards,” the CBB noted in the policy framework, as viewed by IFN Fintech. The factors include: technological innovation, cybersecurity and interoperability.

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