Bahrain has been given the green light to join a GCC-wide unified system for payments and financial settlements.
The Shura Council unanimously approved the urgently-drafted government legislation yesterday.
The move, also already approved by MPs unanimously last month, will now be ratified by His Majesty King Hamad.
The legislation aims to establish a system linking the payment and settlement systems between the GCC countries.
It also seeks to enhance the safety and efficiency of shared Gulf payment systems to reduce potential risks to them in a way that leads to maintaining financial stability in the GCC countries and serves their interests.
The legislation aims to establish the powers of the central banks, supervising and monitoring the payment systems between the GCC countries while also developing them.
That is in addition to promoting and developing clearing operations using the mechanism and procedures agreed upon by the central banks.
Central Bank of Bahrain banking operations executive director Hessa Al Sadah told Shura Council members during the upper chamber’s weekly session yesterday that five GCC countries have signed up for the unified system, but only Saudi Arabia has finalised all formalities.
“The electronic platform will have all official exchange rates daily and will enable account-to-account transfers, purchases and import to export, amongst others, without the need for SWIFT or corresponding banking protocols.”
Ms Al Sadah added that the new system will follow existing money laundering and anti-phishing rules.
She also said that Bahrain was on track to pilot the digital dinar.
“We are exploring advanced options for the digital currency and are set to start with the pilot soon.”
According to the Shura Council financial and economic committee, the unified system establishes a regional infrastructure while preserving its integrity by providing cross-border real-time settlement systems for GCC countries.
It will also support dealing in the local currencies of the GCC countries as well as financial settlement processes between central banks.
That is in addition to enhancing integration between financial markets and ensuring ‘the speedy completion of cash transfers’ while unifying co-ordination and protections efforts as well as supporting bilateral and multilateral trade relations.
Committee chairman Khalid Al Maskati said yesterday that the system could operate with Saudi Arabia, the first to complete all formalities, and Bahrain.
“The establishment mandate states that two nations can run the system; Saudi Arabia is ready and in a few weeks we too will be ready, and others can easily join,” he said.
“There is huge trade and finance flowing between all GCC countries and this easier approach is beneficial as it will cut down on all formalities that take days, and contribute to missed opportunities.”
The GDN reported in March that Benefit, the operator of the national electronic fund transfer system (EFTS), is looking to go beyond the shores of Bahrain as part of a new strategy.
The company, which was established as the national ATM and point-of-sale switch in 1997, has since developed into a fintech innovator with ambitions to take its expertise to a global platform and tap newer markets across the world.
Besides internationalisation, the 2022-24 strategy roadmap lists multiple initiatives focusing on payment infrastructure, enabling access to credit and supporting digitalisation.
Fawri+ is an almost real-time fund transfer service which allows individuals or entities to transfer funds of up to BD1,000 per day in less than 30 seconds; whereas Fawri is a deferred settlement fund transfer service which allows individuals or entities to transfer any amount within a few hours of the business day, with Fawateer allowing real-time bill payments.