Financial Crime World

CENTRAL BANK OF BAHRAIN GIVES GREEN LIGHT TO FLOATING PARITY RATE

The Central Bank of Bahrain has announced that it will adopt a floating parity rate for the country’s currency, aimed at stabilizing the Bahraini Dinar against other major currencies. This decision comes after a thorough review of the current exchange rate system and consultation with international experts.

New Exchange Rate Regime

Under the new regime, the Central Bank will be free to adjust the parity rate of the Bahraini Dinar against other major currencies such as the US Dollar and the Euro. This means that the value of the dinar will fluctuate based on market forces, rather than being fixed at a predetermined rate.

Minimum Foreign Exchange Reserve

The bank has also announced that it will maintain a minimum foreign exchange reserve of 100% of the value of currency in circulation, with the option to reduce this level to 75% in exceptional circumstances. This move is aimed at ensuring the stability of the financial system and maintaining confidence in the country’s economy.

Additional Responsibilities

In addition to adjusting the parity rate, the Central Bank has also been given the authority to:

  • Buy and sell gold and foreign currencies on behalf of the government
  • Administer the national debt
  • Advance loans to the government in exceptional circumstances
  • Buy, sell, and deal in government debt instruments

Exemption from Taxes and Fees

The Central Bank of Bahrain has been exempted from all taxes and fees, aimed at encouraging foreign investment and attracting international institutions to do business with the bank. This means that the bank will not be subject to any taxes or fees on its capital, property, transactions, or profits.

Strengthening the Financial System

The Central Bank of Bahrain’s new powers and responsibilities are aimed at strengthening the country’s financial system and maintaining confidence in the economy. The bank is expected to play a key role in stabilizing the currency and maintaining economic stability in the face of global economic uncertainty.