- A number of Arab countries have finalized a regional international payments system
- Rising costs and downsizing at traditional banks prompted the move
- System expected to go live by 2020
Several Arab states have just put the finishing touches on a plan to create an independent, regional remittance system. The current payments system in the region has been hit hard by rising costs and bank downsizing.
Most cross-border payments in Arab nations are handled by banks acting as agents for foreign institutions that don't have a presence in a particular country.
However, recent changes to anti-money laundering regulations in the US and Europe have made this practice increasingly expensive, forcing participating Arab banks to pass the cost along to consumers. Other banks have abandoned the system altogether, focusing instead on more profitable markets.
The arrangement was approved by the board of the Arab Monetary Fund (AMF), which represents 22 member nations from the Gulf states to Morocco and Sudan.
The system will establish an independent, regional authority that will work to clear and settle international payments between AMF member countries. Transactional support will be provided by Arab central banks. Officials estimate an initial capital infusion of $100m.
"The aim of the entity is to promote the use of local currencies in intra-Arab payments clearing and settlement transactions, alongside main international currencies," said an AMF representative.
AMF has not provided a specific roll-out date, but officials have said they hope to have the new system in place and operational by 2020.
The Arab Monetary Fund was founded in 1976. Member nations include Jordan, Bahrain, Tunisia, United Arab Emirates, Algeria, Djibouti, Sudan, Syria, Saudi Arabia, Somalia, Iraq, Oman, Kuwait, Lebanon, Palestine, Qatar, Libya, Egypt, Mauritania, Morocco, Yemen and Comoros.
- A number of Arab countries have finalized a regional international payments system
- Rising costs and downsizing at traditional banks prompted the move
- System expected to go live by 2020
Several Arab states have just put the finishing touches on a plan to create an independent, regional remittance system. The current payments system in the region has been hit hard by rising costs and bank downsizing.
Most cross-border payments in Arab nations are handled by banks acting as agents for foreign institutions that don't have a presence in a particular country.
However, recent changes to anti-money laundering regulations in the US and Europe have made this practice increasingly expensive, forcing participating Arab banks to pass the cost along to consumers. Other banks have abandoned the system altogether, focusing instead on more profitable markets.
The arrangement was approved by the board of the Arab Monetary Fund (AMF), which represents 22 member nations from the Gulf states to Morocco and Sudan.
The system will establish an independent, regional authority that will work to clear and settle international payments between AMF member countries. Transactional support will be provided by Arab central banks. Officials estimate an initial capital infusion of $100m.
"The aim of the entity is to promote the use of local currencies in intra-Arab payments clearing and settlement transactions, alongside main international currencies," said an AMF representative.
AMF has not provided a specific roll-out date, but officials have said they hope to have the new system in place and operational by 2020.
The Arab Monetary Fund was founded in 1976. Member nations include Jordan, Bahrain, Tunisia, United Arab Emirates, Algeria, Djibouti, Sudan, Syria, Saudi Arabia, Somalia, Iraq, Oman, Kuwait, Lebanon, Palestine, Qatar, Libya, Egypt, Mauritania, Morocco, Yemen and Comoros.
