To foster an environment of monetary stability conducive to economic development, and to ensure a stable and sound financial system.
Full scope of monetary policy was provided for under the Central Bank of The Bahamas Act, 1974 now superseded by the Central Bank of The Bahamas Act, 2000. Accordingly, it is the duty of the Bank to promote and maintain monetary stability and credit and balance of payments conditions conducive to the orderly development of the economy; to promote and maintain an adequate banking system and high standards of conduct and management therein; and to advise the Minister of Finance on any matter of a financial or monetary nature.
Additionally, one of the Bank's major objectives is to safeguard the external value of the Bahamian dollar, which is fixed at a 1:1 parity with the United States dollar. The responsibility for the administration of Exchange Control Regulations is vested solely with the Central Bank of The Bahamas, which maintains the country's external reserves. The administration of exchange controls has been relaxed considerably over the years, marked by increased annual foreign currency allowances for residents and the delegation of increased approval authority to commercial banks.
The Central Bank fills the traditional roles as issuer of legal tender, banker to both domestic banks and the government, and regulator and supervisor of the banking sector. As supervisor of banks, the Central Bank promotes the soundness of banks through the effective application of international regulatory and supervisory standards. These standards were completely revamped during 2000 and 2001 - in response to global multi-lateral initiatives - to heighten the fight against money laundering and other criminal abuses within the international financial system.
The results have been evident both in terms of the Bank's approach to licensing new financial institutions, as well as in a more enhanced supervisory framework for financial institutions. Important features of the new regulatory regime now include broader and more uniform supervision of bank and non-bank financial activities, and stronger mechanisms for international cooperation among Bahamians and similarly placed foreign supervisory and law enforcement agencies. In all, the Bank's overall policy objective is the promotion of a stable economic environment conducive to high levels of domestic production, employment and growth.