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Bahraini Central Bank Law

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Currency

The Central Bank is responsible for managing Bahrain’s currency. Here are the key points related to currency and exchange rates:

  • Exclusive Authority: The Central Bank is the exclusive authority to issue banknotes and coins in Bahrain.
  • Official Currency: The official currency of Bahrain is the Bahraini Dinar (BD).
  • Contingency Reserve: The Central Bank maintains a Contingency Reserve, which can be used for purposes determined by the Board.

Exchange Rates

The Central Bank has control over exchange rates. Here’s how it works:

  • Fixed Exchange Rates: The Central Bank fixes exchange rates for foreign currencies.
  • Revaluation Reserve Account: Changes in exchange rates are reflected in the Revaluation Reserve Account.

Foreign Reserves

Maintaining a stable foreign reserve is crucial for Bahrain’s economy. Here are the key points related to foreign reserves:

  • Minimum Level: The Central Bank is required to maintain a minimum level of foreign reserves.
  • Foreign Exchange Transactions: Foreign exchange transactions are carried out by the Central Bank on behalf of the government and commercial banks.

Relations with the Government

The Central Bank has a close relationship with the Bahraini government. Here’s how it works:

  • Financial Agent: The Central Bank acts as the financial agent for the government.
  • National Debt Administration: The Central Bank administers the national debt, including procedures for issue and redemption of government debt instruments.
  • Loans to the Government: The Central Bank can advance loans to the government in exceptional circumstances.

International Relations

The Central Bank is a member of international financial institutions (IFI) and has relationships with other countries. Here are the key points related to international relations:

  • Member of IFI: The Central Bank is a member of international financial institutions (IFI).
  • Transactions with IFI: The Central Bank transacts operations on behalf of the government with IFIs.
  • Tax Exemptions: The Central Bank’s capital, property, transactions, and profits are exempt from all taxes and fees.