Arab states end regional payment settlement mechanism

by **RamblerNash** Sun Apr 22, 2018 12:59 pm

Arab states end regional payment settlement mechanism

22/04/2018

Economy News _ Baghdad

Arab countries have finalized plans to set up an independent payment system across the region after high compliance costs and global banks have reduced their activities to undermine existing arrangements.

Correspondent banks currently make the most payments and settlements among Arab countries and act as agents for foreign institutions that have no actual presence in a country.

US and European banks' tightening in recent years has increased the cost of anti-money laundering, while some banks have moved out of the market to focus on more profitable sectors.

The Arab Monetary Fund (AMF) said on Sunday its board had approved the creation of an independent regional entity to settle payments among the 22 member states.

The fund did not specify when the new mechanism would start, but Bank officials had earlier expected it to start operating in 2020.

The capital of the new entity, which is supported by Arab banks, will be $ 100 million and owned by the Arab Monetary Fund.

The new entity aims to support the use of local currencies in the settlement process between Arab countries as well as major international currencies, the IMF said.

http://economy-news.net/content.php?id=12029