The article states that the Kingdom of Bahrain plays a special role in the Islamic finance development. The country, despite its small territory, has the developed financial system that includes 406 operating financial institutions. The contribution of financial sector to GDP makes 16.7%. The favorable business environment created in the Kingdom promotes the activity of both Islamic and traditional financial institutions. The Central Bank of Bahrain has played a key role in the development of Islamic finance. All these factors increase the relevance of defining the role of this State and the contribution of its Central Bank to enhancing the positions of Islamic finance in the world. On the basis of the historical method, the author has provided a brief description of the milestones of the Bahrain financial sector development. Using the induction and synergy methods, the author has defined measures to encourage the international infrastructure development and Islamic finance regulation. The study includes the main characteristics of the modern development of Islamic finance and identifies the place of Bahrain in this process. The author concludes that a high level of development and emphatic success of the financial sector of the Kingdom of Bahrain served as important factors of its active position in strengthening the system of Islamic finance in the world. The initiatives and efforts of the Central Bank of Bahrain on developing standards for the Islamic finance stimulated strengthening its domestic and international positions. Despite limited territorial, human and natural resources, this State created favorable conditions for operations of foreign and local Islamic financial institutions, as well as of international organizations promoting regulation and development of Islamic finance.
Keywords: Islamic finance, Central Bank, Bahrain, regulation
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