Central Bank of Bahrain Bylaws: Key Provisions

The Central Bank of Bahrain has established a set of bylaws that govern its operations, including its foreign exchange reserve, contingency reserve, revaluation reserve, relations with the government and international financial institutions, transactions, investments, and permitted transactions.

Foreign Exchange Reserve Requirements

• The Central Bank is required to maintain a minimum foreign exchange reserve of at least 75% of the value of the currency in circulation (Article 19).
• This requirement ensures that the Central Bank has sufficient foreign exchange reserves to meet its obligations and stabilize the Bahraini Dinar.

Maintaining Parity-Rate of the Bahraini Dinar

• The Central Bank may use various means to maintain the parity-rate of the Bahraini Dinar, including buying and selling gold or convertible currencies (Article 18).
• This provision allows the Central Bank to intervene in the foreign exchange market to stabilize the currency.

Revaluation Reserve Account

• The Central Bank’s profits from revaluation of its assets or liabilities shall be entered into a special account called the “Revaluation Reserve Account” (Article 22).
• This account helps to build up the Central Bank’s reserves and maintain financial stability.

Tax Exemptions for the Central Bank

• The Central Bank is exempt from all taxes and fees (Article 28).
• This exemption ensures that the Central Bank can operate independently without being burdened by taxes or fees.