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The Central Bank of Bahrain: A Law or Charter Excerpt

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The Central Bank of Bahrain (CBB) plays a crucial role in regulating and supervising banks in Bahrain. This excerpt from the CBB’s law or charter outlines the institution’s structure, purpose, and responsibilities.

Chapter 1: Establishment and Organization

Purpose and Structure

  • The CBB is established as a public institution with its own capital, headquarters, and staff.
  • The CBB’s purpose is to regulate and supervise banks in Bahrain (Article 2).
  • Articles 3-5 outline the organizational structure of the CBB.

Key Responsibilities

  • Establishing policies for regulating banks in Bahrain.
  • Supervising banking operations to ensure compliance with laws and regulations.
  • Protecting depositors’ interests by ensuring bank stability and liquidity.

Chapter 2: Capital and Financial Resources

Funding and Expenses

  • The CBB’s capital will be funded by the Government of Bahrain (Article 6).
  • The CBB’s financial resources will be used to cover its expenses, such as paying staff salaries and maintaining facilities (Article 7).

Chapter 3: Monetary Policy

Implementing Monetary Policy

  • Articles 9-12 establish the CBB’s role in implementing monetary policy in Bahrain, including setting interest rates and regulating the money supply.
  • Article 13 outlines how the CBB will manage foreign exchange reserves.

Key Responsibilities

  • Maintaining price stability and promoting economic growth.
  • Regulating the money supply to prevent inflation.
  • Managing foreign exchange reserves to ensure currency stability.

Chapter 4: Banking Operations

Authorized Operations

  • Articles 15-20 outline the types of banking operations that the CBB is authorized to conduct, such as lending to banks and managing deposits.

Chapter 5: Relations with the Government and International Monetary Institutions

Relationship with the Government

  • The CBB will act as the banker to the Government of Bahrain (Article 23).
  • The CBB will administer national debt in Bahrain (Article 24).

International Interactions

  • Articles 25-28 specify how the CBB will interact with international financial institutions, including providing loans and credit facilities.

Chapter 6: Miscellaneous Provisions

  • This chapter contains provisions that do not fit into the previous categories, such as tax exemptions for the CBB.

Overall, this excerpt from the Central Bank of Bahrain’s law or charter outlines the institution’s structure, purpose, and responsibilities in regulating and supervising banks in Bahrain.