Arab Banking - Regulatory Organizations on the Rise

As the combined financial influence of the Middle Eastern and Northern African countries (often referred to as MENA) has grown, regulatory structures have developed to guide the development of the Arab Banking system. The growth of these economies has generally outpaced the growth of Western economies; as a result, the need for a standardized set of rules and banking best practices has emerged.

Current Regulatory Groups in Islamic Banking

Some of these regulatory bodies already exist, especially in the region's wealthier countries where sophisticated financial markets have operated for years. This regulation is important for a number of reasons. The first is that a unified regulatory system helps all economies grow in a stable, consistent, and sensible manner. The second is that Arab banking can seem complex and abstruse to outsiders; unifying the regulatory scheme of the MENA countries therefore lends the credibility of size and uniformity to the system.

Capital Markets Authority

The Capital Markets Authority (CMA) is a regulatory institution in Saudi Arabia, established in 2003, which focuses exclusively on capital markets operation and transaction. The CMA regulates the Saudi capital markets by issuing new rules and regulations.

Qatar Financial Centre Authority

Another such institution is the Qatar Financial Centre Authority (QFCA), which was established in 2005 and is located in Doha. The QFCA regulates the Qatari banking, insurance and reinsurance, and asset management industries.

The Bahrain CBB Rulebook

A third established regulatory code is Bahrain's CBB Rulebook, issued in 2004 by the Central Bank of Bahrain (CBB). This rulebook applies to all aspects of the Bahraini financial sector and dictates participation in the Bahraini economy.

The Future of Unified Regulations in Arab Banking

As the influence of the MENA economies grow, so too will pressure to unify the MENA countries' regulatory schemes. There has been some movement toward a MENA-wide regulatory body to dictate the official terms of Arab banking and keep all of the MENA countries (and some have even suggested adding Southeast Asia to the regulatory purview) under the umbrella of one regulatory framework.

The most public and prominent of these suggestions came recently from Sultan bin Naser al-Suwaidi, the head of the UAE's central bank. He suggested that a regulatory framework unified across the economies of the MENA countries would help the region grow steadily and with direction.