Improving Financial Infrastructure in Republic of Yemen

Project Development Objective (PDO)

This project aims to develop the Republic of Yemen’s financial infrastructures by doing the following: (a) modernizing national payment and settlement systems, thereby helping to improve financial safety, efficiency, and inclusion and (b) increasing the depth, breadth, data quality, sufficiency, and timeliness of the Republic of Yemen’s credit registry and credit bureau.


The Central Bank of Yemen (CBY) has requested technical assistance to modernize the country’s national payment and settlement system and national credit-reporting system, specifically by addressing issues with the systems’ current legal, regulatory, and oversight frameworks. 
The CBY has identified several gaps and weaknesses in the Republic of Yemen’s national payment system (NPS), including (a) lack of an NPS strategy, (b) lack of an oversight framework, (c) gaps in the legal and regulatory frameworks, and (d) lack of a national payments council (NPC). In addition, the public credit registry (PCR), which is hosted by the CBY, is weak and outdated. Before it can be a robust system, the PCR’s many issues need to be resolved.


The project team is providing technical assistance to develop an NPS strategy, specifically by identifying gaps and presenting recommendations across the nine pillars that form a country’s technical and regulatory frameworks for payment and settlement. For each of the nine areas, the team is conducting a stocktaking exercise to understand the payment environment in the Republic of Yemen. 
As part of the NPS strategy, the project team is also identifying specific measures to strengthen the legal and regulatory frameworks of the NPS so that it can accommodate certain core components. The payment system’s oversight framework outlines (a) a policy for supervision; (b) various tools such as licensing, data collection, and on-site inspections and audits of payment service providers; (c) various oversight procedures; and (d) organizational arrangements at the CBY. The strategy also includes a collaborative framework for the establishment of an NPC to foster cooperation and dialogue among all NPS stakeholders in the Republic of Yemen. 
The project team is identifying necessary changes to the legal and regulatory framework of the Republic of Yemen credit reporting system (CRS) to ensure that the framework is clear and predictable. The CRS oversight framework includes (a) an oversight policy document; (b) a blueprint for the establishment of a dedicated oversight unit; (c) examination tools for credit-reporting service providers, as well as for data providers and data users; and (d) other relevant oversight procedures. In an effort to raise awareness and to build stakeholder capacity, the project team is also providing a series of training workshops to explain the general principles for credit reporting, the proposed legal and regulatory CRS frameworks, and the roles and obligations of different workshop participants.

Expected Outcomes

Expected short- and medium-term outcomes are as follows: 
1.  Establishing a roadmap of and adopting a strategy for reform
2.  Fostering cooperation and dialogue among NPS stakeholders (for example, banks, payment
     service providers, and other relevant authorities)
3.  Enacting laws and regulations in line with international best practices 
4.  Putting oversight arrangements in place, along with adequate policies, procedures, and tools in
     line with the Principles for Financial Market Infrastructures (developed by the Bank for
     International Settlements’ Committee on Payment and Settlement Systems and the International
     Organization of Securities’ Technical Committee) and other international best practices
5.  Modernizing payment and settlement services and increasing financial safety, efficiency, and
6.  Aligning risk-management practices with international best practices