The Central Bank
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
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
Implement monetary policy
Supervise and regulate the banking sectors
Act as the government fiscal agent
Encourage the growth of Bahrain as a major international
Manage the foreign currency cash reserves of the kingdom
Determining and setting the official
interest rate – used to manage both
inflation and the country’s exchange rate.
How the Bank Influences an
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.
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.
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.