The central bank


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It explains the responsibilities of the bank and how the central bank of Bahrain influences an economy

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The central bank

  1. 1. The Central Bank
  2. 2. The Central Bank Simple overview-1 Definition-2 Responsibilities-3 How -4 the Bank Influences an Economy
  3. 3. Simple overview  The central is pubic corporate entity  Was established in 1973 as Bahrain Monetary Agency  The central Bank is responsible for maintaining monetary and financial stability in the kingdom industry The Bank is located in the Diplomatic. It also houses a splendid coin & currency museum with collections dating back to 653 AD 
  4. 4. Definition: A central bank, reserve bank, or monetary authority is a public institution that manages the currency in the Kingdom, money supply, interest rates and oversee the commercial banking system of Bahrain
  5. 5. Responsibilities  Implement monetary policy  Supervise and regulate the banking sectors  Act as the government fiscal agent  Encourage the growth of Bahrain as a major international financial centre  Manage the foreign currency cash reserves of the kingdom
  6. 6.  Determining and setting the official interest rate – used to manage both inflation and the country’s exchange rate.
  7. 7. How the Bank Influences an Economy A central bank can be said to have two main kinds of functions: (1) Macroeconomic when regulating inflation and price stability (2) Microeconomic when functioning as a lender of last resort.
  8. 8. Macroeconomic Influences As it is responsible for price stability, the central bank must regulate the level of inflation by controlling money supplies by means of monetary policy. The central bank performs open market transactions that either inject the market with liquidity or absorb extra funds, directly affecting the level of inflation.
  9. 9. Microeconomic Influences For example If the commercial bank does not have enough liquidity to meet its clients' demands (commercial banks typically do not hold reserves equal to the needs of the entire market), the commercial bank can turn to the central bank to borrow additional funds.
  10. 10. Questions
  11. 11. Thank you for focusing with me
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