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Currency Management in Bahrain
The Central Bank of Bahrain has a crucial role in managing the currency in the Kingdom. The relevant articles related to currency management are summarized below.
Issuance and Circulation of Currency
- Article 14 states that the Central Bank has exclusive authority to issue currency in the Kingdom.
- Article 15 outlines the terms and conditions for the issuance, circulation, and management of currency.
Contingency Reserve
A percentage of the net profits of the Central Bank is required to be credited to a special account called the “Contingency Reserve”. This reserve serves as a safeguard against any unexpected financial difficulties.
- Article 21 requires the establishment of the Contingency Reserve.
Revaluation Reserve Account
The Revaluation Reserve Account is established to cover losses or gains from changes in the value of gold or foreign currencies. Any credit balance can be used to redeem bonds issued by the Central Bank.
- Article 22 establishes the Revaluation Reserve Account.
Role as Financial Agent of the Government
The Central Bank has been designated as the banker and financial agent of the government. This role enables the Central Bank to provide various financial services to the government.
- Article 23 designates the Central Bank as the banker and financial agent of the government.
Loans to the Government
In exceptional circumstances, the Central Bank is allowed to advance loans to the government, subject to certain conditions.
- Article 25 outlines the terms for advancing loans to the government.