The Arab Monetary Fund approach for financial infrastructure is to incorporate the broader perspective of Financial Infrastructure, as opposed to the narrower focus on payment systems. Financial Infrastructure, broadly defined, comprises all of the underlying foundation for a country’s financial system including all institutions, information, technologies and rules & standards that enable financial access through transparent and stable financial systems.
Key elements of financial infrastructure include, among others, modernized collateral registries, global credit information sharing systems, functioning systems for payment, securities settlement & remittances and strong local debt markets management. A safe and efficient financial infrastructure fosters financial inclusion and financial stability and is imperative for the successful operation of modern integrated financial markets.
Indeed, poor financial infrastructure in many developing countries poses a considerable constraint upon financial institutions to expand their offering of financial services, credit, savings and payment services to underserved segments of the population and the economy. It also creates risks, which can threaten the stability of the financial system as a whole, as poor payment, and settlement systems may exacerbate financial crises, while the absence of credit bureaus in conjunction with strong credit growth may lead to one.