MANAMA, 14 September 2006 — The existing Bahraini dinar currency in circulation will remain the legal tender of exchange, as the newly established Central Bank of Bahrain (CBB) take over the duties of Bahrain Monetary Agency (BMA), Bahraini financial officials said yesterday.
CBB Deputy Governor Anwar Khalifa Al-Sadah said that the enactment of the CBB law does not affect the bank’s responsibilities, which were previously carried out by the BMA, nor does it affect the existing currency in circulation, which will continue to remain legal tender.
“The new law consolidates into a single piece of legislation the full scope of CBB’s responsibilities, as a central bank and regulator of Bahrain’s financial services industry,” he said during a press conference to officially launch the new entity. “Legally, the CBB, as the successor organization of the BMA, assumes all the rights and obligations of the now-defunct BMA. As such, the existing currency in circulation also remains a legal tender.”
Sadah added that the establishment of the CBB to succeed the 33-year-old agency would contribute to further Bahrain’s strengths as one of the region’s leading financial centers.
The CBB, which carries the full range of tasks previously undertaken by the BMA, is endowed with strong operational independence and a wider range of enforcement powers, according to him.
“This will help the CBB maintain clean markets, a feature that has been one of the strengths of Bahrain’s financial system,” he said.
The CBB came into existence on last week, following the enactment of the new Central Bank of Bahrain and Financial Institutions Law (CBB Law), which governs the activities of the Central Bank of Bahrain. The CBB Law was, in part, necessitated by an expansion of BMA’s role as regulator of Bahrain’s financial services industry.
In 2002, the BMA assumed responsibility for regulating the insurance and capital market sectors, in addition to the banking industry.
“The new law modernizes and amalgamates the different laws, which previously governed the various segments of the financial services industry, into a single, comprehensive document,” said Sadah. “It also marks the final stage in the creation of a single regulator for the financial services industry”.
The CBB Law provides enhanced enforcement powers to the CBB as well as reinforces its operational independence.
It was established with an authorized capital of BD500 million ($1.3 billion), of which BD200 million ($532 million) will be paid up.