Kuwait Central Bank Law of 1968

Overview

The Kuwait Central Bank Law of 1968 is a landmark legislation that outlines the functions, powers, and responsibilities of the Kuwait Central Bank. This comprehensive law aims to establish a central bank that will regulate the banking sector, maintain financial stability, and ensure the soundness of the Kuwaiti economy.

Key Provisions

The Kuwait Central Bank Law of 1968 includes several key provisions:

Objectives

To regulate the issue of currency notes and coins.
To supervise and control the activities of banks in Kuwait.
To manage foreign exchange and to establish an effective monetary policy.

Functions

Act as a banker for the Government, or for central banks, or other foreign banks and for international financial or monetary institutions, and act as correspondent for such banks and institutions.
Grant advances or credits to central banks, other foreign banks or international financial or monetary institutions, and obtain credits, advances or loans from them, provided that such operations are within the scope of its functions as a central bank.
Purchase, sell, discount or rediscount bonds or bills or certificates issued or guaranteed by foreign governments or international financial or monetary institutions, provided that they are expressed in freely convertible foreign currencies and are easily negotiable in financial markets.

Prohibited Operations

Engage in trade operations outside the scope of its functions specified in this Law, or have a direct interest in any commercial, agricultural, industrial or any other undertaking except as provided in Article (37).
Buy or sell immovable property except as provided in paragraph 2 of Article (44). However, the Bank may purchase or acquire, by accord or by forced-sale, movable or immovable property in the way of collecting any of its claims, provided that the Bank shall sell such property within the shortest possible time unless it is used for running its business.
Purchase shares or bonds of companies or public establishments, except as specified in Article (37).

Financial Year

The fiscal year of the Central Bank shall be the same as the fiscal year of the State.

Audit and Reporting

The accounts of the Central Bank shall be audited by one auditor or more. The Council of Ministers shall, on the proposal of the Minister of Finance, select one or more auditors and fix their fees.

Exemptions

The Central Bank shall be exempt from all taxes, duties and financial dues whatsoever, whether they be for the treasury, municipalities or any other public institution or body.

Liquidation

The Central Bank may only be liquidated by a law specifying the liquidation procedures and their dates.

Conclusion

The Kuwait Central Bank Law of 1968 provides a comprehensive framework for the central bank’s operations, ensuring its independence, accountability, and effectiveness in maintaining financial stability and promoting economic growth in Kuwait.