• Chapter 4 Chapter 4 Parity-Rate and Foreign Reserve and Exchange Transactions

    • Article (18) Parity Rate

      (a) Subject to the obligations of the Kingdom under any international agreement of which it is a party, the Board may adopt a resolution to fix or change the parity-rate of the Bahraini Dinar against any convertible currency or any recognized standard of an international unit of currency.
      (b) Any change in the parity-rate of the Bahraini Dinar shall be published by the Central Bank in the Official Gazette and in one English and one Arabic local daily newspaper published in the Kingdom.
      (c) The Central Bank may use whatever means deemed appropriate for the purpose of maintaining the parity-rate including buying and selling of gold or convertible currencies.

    • Article (19) Foreign Reserve

      (a) The Central Bank shall, upon the terms and conditions set by a resolution issued by the Board, maintain a foreign reserve comprised of all or any of the following assets:
      1. Currencies and gold bullion.
      2. Foreign convertible currencies, or balances of convertible currencies in foreign banks.
      3. Any internationally recognized assets including the gold part of the Kingdom's share in the International Monetary Fund and the Special Drawing Rights allocated to the Kingdom in the International Monetary Fund;
      4. Bills of Exchange and Promissory Notes payable outside the Kingdom in convertible currencies;
      5. Treasury Notes issued by foreign governments and payable in convertible currencies
      6. Bonds specified by the Board, issued or guaranteed by foreign governments or international financial institutions, provided that they are payable in convertible currencies.
      7. Other Bonds as the Board shall determine, issued by a foreign entity provided that they are negotiable in international financial markets and payable in convertible currencies.
      8. Any other assets valuated in foreign currencies approved by the Board.
      (b) The amount of foreign exchange reserve permanently maintained by the Central Bank shall not be less than 100% of the value of the currency in circulation.
      (c) In exceptional circumstances, the minimum amount of the Foreign Exchange Reserve may be changed by a resolution issued by the Board, provided that such minimum shall not be less than 75% of the value of the currency in circulation.

    • Article (20) Foreign Exchange Transactions

      (a) The Central Bank may buy, sell and deal in gold coins and bullion, foreign currencies, treasury notes and other bonds and to open and maintain accounts abroad, and to act as an agent or correspondent for foreign central banks or similar institutions as well as for foreign governments and international financial institutions.
      (b) The Central Bank shall carry out any of the transactions referred to in the preceding paragraph in accordance with such terms and conditions as the Board may determine.

    • Article (21) Contingency Reserve

      (a) A percentage of the net profits of the Central Bank determined by the Board shall be credited at the end of each financial year to a special account to be entitled the "Contingency Reserve".
      (b) The sums standing in the credit of the Contingency Reserve can be used for such purposes that serve the objectives of the Central Bank as determined by the Board from time to time.

    • Article (22) Revaluation Reserve

      (a) All profits resulting from the revaluation of the Central Bank's assets or liabilities in gold or foreign currencies as a result of any change in the parity-rate of the Bahraini Dinar or the rate of exchange of the Central Bank's assets of such currencies, shall be entered in a special account to be entitled "Revaluation Reserve Account".
      (b) Losses resulting from any change in the value of the Central Bank's assets or liabilities of gold or foreign currencies shall be covered from the credit balance of the Revaluation Reserve Account. If such balance is insufficient to cover such losses, the Government may issue bonds in favour of the Central Bank for the value of the deficit and such bonds shall be interest-free and non-transferable.
      (c) The Central Bank shall use any credit balance in the Revaluation Reserve Account at the end of each financial year to redeem any bonds it has issued in accordance with the provisions of the preceding paragraph.
      (d) The revaluation under this Article shall be carried out at least once every year at such time as the Board may determine.
      (e) Any entries in the assets or liabilities of the Revaluation Account shall only be made in accordance with this Article.