The Central Bank of Bahrain (CBB) is a public corporate entity established by the ‎Central Bank of Bahrain and Financial Institutions Law 2006, created on ‎September 7, 2006 by the issuance of Decree No. (64) of 2006. The CBB ‎ensures monetary stability through Bahrain’s long-standing fixed exchange rate ‎policy against the US dollar, first established in 1980. This has provided Bahrain ‎with a high degree of economic and price stability, while encouraging the sound ‎growth of the national economy. A key objective of the CBB is to ensure the ‎continued soundness and stability of financial institutions and markets. As the ‎country’s single financial services regulator, covering banking, insurance, and the ‎capital markets, the cornerstone of CBB’s policy is the implementation of ‎international best practice in all aspects of financial supervision, a policy which ‎has helped Bahrain earn its international reputation as the best-regulated ‎financial jurisdiction in the Middle East.‎

In the early 1990s, Bahrain was the first country outside the G10 to apply the ‎BIS’s 8% capital adequacy ratio to its locally incorporated banks (from 1998, the ‎minimum capital adequacy ratio was raised to 12%).‎

Bahrain was also the first country in the Middle East to implement International ‎Accounting Standards (IAS) for banks and other financial institutions operating in ‎the Kingdom. Bahrain is also acknowledged as having the most innovative ‎financial regulator in the region, particularly in view of the country’s emergence ‎as the world’s Islamic finance centre.‎

Bahrain’s banking system comprises both conventional and Islamic banks and is ‎the largest component of the financial system, accounting for over 85% of total ‎financial assets. The conventional segment includes 25 retail banks, 62 ‎wholesale banks, as well as 33 representative offices of overseas banks.‎

The Islamic segment includes six retail banks and 20 wholesale banks. The ‎banking sector has played a pivotal role in the emergence of Bahrain as a ‎leading financial center in the region. As at June 2009, banking sector assets ‎stood at over US$236bn. The growth of Islamic banking in particular has been ‎remarkable, with total assets in this segment jumping from US$1.9bn in 2000 to ‎US$26.3bn by June 2009, an increase of over 12 times. The market share of ‎Islamic banks correspondingly increased from 1.8% of total banking assets in ‎‎2000 to 11.1% in June 2009.‎

The Bahrain Stock Exchange (BSE) is the focus of capital market activities in ‎Bahrain. The exchange has grown in the number of listed securities with 49 ‎equities, 13 bonds (both conventional and Islamic) and 38 mutual funds currently ‎listed. As at end June 2009, market capitalisation stood at US$17.20bn, ‎representing roughly 135% of 2008 Real GDP. There is also a Clearing,‎

Settlement and Central Depository System (CDS), which is likewise automated. ‎These two systems have combined to ensure a fast and efficient trading process, ‎ensuring delivery versus payment on a T+2 basis.‎

Looking to the future, the CBB will remain focused on ensuring Bahrain’s ‎enduring success as an international financial centre with a diverse mix of ‎leading international, regional and local financial institutions and enhancing its ‎own reputation as a highly regarded regulator.‎