Central Bank of Yemen Law No. 14 (2000)

8/3/2019 Central Bank of Yemen Law No. 14 (2000)

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The P resid en t o f T he R ep ub lic ,

Law No 14. -of 2000on the Central Bank of Yemen

Having review ed th e C onstitu tion of the R ep ublic of Y em en, andUpo n th e a pp ro va l o f th e Hou se o f R ep resen ta tiv es,

H ereb y issu es th e fo llowin g L aw :Chapter 1Designation and Definitions

Article 1 This law shall be called th e Law on the C entral B ank of Y em en.A rticle 2 For purposes of this law , the follow ing term s and expressions shall have the

m ean in gs in dica ted b elow, u nle ss th e co ntex t sh ou ld req uire a no th er m ean in g:a. Yemenb. Governmentc. Bankd. Boarde. Governorf. Deputy Governor

T he R epublic of Y em en.T he G overnm ent of the R epublic of Y em en.T he C entral B ank of Y em en.The B oard of D irectors of the C entral B ank of Y em en.T he G overnor of the C entral B ank of Y em en.The D eputy G overnor of the C entral B ank of Y em en.

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p ro visio ns o f th e L aw o n P ub lic In stitu tio ns, A g en cie s,and Corporat ions.

m . F inanc ia l in sti tu ti on Any le ga l e ntity e ng ag in g in b an kin g a ctiv itie s o r a nynonbank c redi t i ns ti tu ti on .

n . Court Any c ou rt h av in g ju risd ic tio n, p ursu an t to th e J ud ic ia lA uth ority L aw , to im plem en t the p rov isio ns o f this lawand o th er law s in forc e.

A rticle 3 T he B ank sh all h av e th e sta tu s o f a le gal en tity, fin an cia l an d adm in istra tiv eauto nom y, a nd a sp ecial sea l. It sh all c arry o ut its d uties in acco rd an ce w ith th ep ro visio ns o f th is law, e ntire ly in de pe nd en t from a ny o th er a uth ority in th e p ursu it

-.__/ of its objectives and the performance of its tasks. The Bank shall receive noin stru ction s from any o th er p erso n o r en tity ex cep t in ac corda nce w ith th eprovisions of this law . T he independence of the B ank shall be respected, and nop erso n sh all in te rfe re in its a ctiv itie s o r a ttempt to in flu en ce its d ec isio ns.

A rticle 4 The B ank shall have its headquarters in the city of Sana=a for purposes ofco nd uc tin g its b usin ess in Y em en an d ab ro ad , an d it m ay o pen b ran ch es, age nc ies,an d o ffic es an d a pp oint c orrespo nd ents, su bject to th e ap pro val o f th e B oard .

Chapter 2Objectives, Duties, and Responsibilities of the Central BankA rticle 5 1. The prim ary objective of the B ank shall be to achieve and m aintain price

sta bility . A no th er o bje ctiv e sh all b e to fo ste r th e liq uid ity , so lv en cy , a nd p ro pe rfu nc tio nin g o f a s ta ble , ma rk et-b as ed fin an cia l sy stem .

2 . W ith ou t p re ju dic e to th e p rin cip le o bje ctiv e d esc rib ed in p ara gra ph (a ) a bo ve ,th e B an k sh all ca rry o ut its activ ities w ith in th e fram ew ork o f th e g ov ernme nt's


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I-4- Ie. To prom ote the sm ooth operation of paym ents system s. Rf T o act as ban ker, ad visor, and fiscal agent of th e G ov ernmen t.3. T he B ank shall follow the adm inistrative an d accou nting m ethod s used bybanks, and shall not be subject to the law s and regulations that apply tog ov ernmen t a ge nc ie s a nd th e p ub lic a nd sem ip ub lic se cto rs.

Chapter 3Capital, Net Earnings, and Reserves

Article 6 L The authorized capital of the Bank shall be YR Is 2 b illio n. T he m in imumsu bscrib ed and paid -u p cap ital of the B ank shall b e YRIs 1 billion, w hich m aybe increased by such am ounts as m ay be proposed by the Bank and approvedb y th e C ou nc il o f M in isters .

2. T he entire paid-up capital shall be subscribed and held solely by theG overnm ent of Y em en. I

A rticle 7 W henever on the balance sheet of the B ank the value of its assets falls below thes um o f its lia bilitie s, c ap ita l, an d G en era l R ese rv e, th e G ov ernmen t sh all re ple nishits capital. T o this end, the M inister of F inance shall deliver to the B ank cash orm arketab le d eb t secu rities in bearer form , issu ed b y the G overnm ent an d bearinginterest at m arket rates, in such am ount or am ounts as shall be necessary to rem edythe de fi ci t.

n.A rticle 8 1 . The net incom e of the B ank for each financial year shall be calculated after

d educting from rev en ues the o perating ex penditu re for the y ear in qu estion an da fte r s ettin g a sid e a llo ca tio ns f or th e f ollow in g:

"nu


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II-5-I[only] to offset losses of the B ank. For the purpose of this article, Alossess

sha ll m ean the ex ce ss of ope ra ting ex pen diture s ove r re ven ue s. II. T he B ank, w ith the approval of the C ouncil of M inisters, m ay establishspe cial reserves for spec ific purpo se s in to which fun ds m ay b e tran sferred

that are available after m aking the allocations described in paragraph 1 ofthis ar ticle.c. The rem aining am ount of net incom e for the financial year shall be used by

the B ank to redeem any securities issued by the G overnm ent to the B ankpursuant to A rticle 7 of this law .

IIU3. T he net incom e for the financial year rem aining after the transfers andredem ptions m ade pursuant to this article shall be paid to the G overnm ent

w ithin four m oriths after the end of the financial year of the B ank. N o transfer,redem ption, or paym ent pursuant to this article shall be m ade if as a resultthereof, the assets of the B ank w ould be less than the sum of its liabilities andpa id -up capi ta l.

4. G ains or losses arising for the Bank in any financial year from changes in thevaluation, recorded on the balance sheet of the B ank, of assets or liabilities inor denom inated in gold, special draw ing rights, or foreign currencies andresulting from any change in the values or exchange rates of gold, speciald raw in g rig hts , o r fo re ig n curre nc ie s in term s of the rial, shall be treated asfollows:a. T he net am ount resulting from [changes in] the valuation shall be reflected


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Chapter 4Management

A rticle 9 T he B ank shall have a B oard of D irectors, m anagem ent consisting of a G overnorand a D eputy G overnor, and a staff.

A rtic le 1 0 1. T he B oard o f D irectors sh all be comp osed o ffiv e m em bers, as fo llo ws:a. The G overnor, w ho shall be C hairm an of the Board of D irectors;b . The D eputy G overnor, w ho shall be the V ice-Chairm an of the B oard of

Directors;. . _ _ . . , '

c. A representative of the Ministry o f F in an ce ; an d'~d. Two other m em bers.

2 . The Governor, Deputy Governor, and the other m em bers of the Board ofD ire cto rs sh all b e n om in ate d b y th e C ou nc il o f M in iste rs an d th eir a pp oin tm e ntsh all b e m ad e e ffec tiv e b y a p re sid en tia l d ec re e.3. The G overnor, Deputy Governor, and the other m em bers of the Board of

D irecto rs m ust b e citizen s o f Y em en and p erso ns o f reco gnized in teg rity w ithp ra ctic al s kills a nd p ro fe ss io na l e xp erie nc e in mone ta ry a nd b ankin g ma tte rs.

4 . The term of the G overnor and Deputy G overnor shall be four years and that ofall other B oard m em bers shall be four years, beginning on the date of theira pp oin tm en t. B oa rd m emb ers sh all b e e lig ib le fo r rea pp oin tm en t u nle ss ag rou nds fo r rem ov al sh ould ap ply to th em ,


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c. is disqu alified or su spend ed by m eans o f a leg al ord er or fails sig nificantly inth e p er fo rmanc e o f h is d utie s a nd re sp on sib ilitie s. I

I. The Governor, D eputy G overnor, or any other m em ber of the Board ofD irectors m ay b e rem oved fro m office b y m ean s of a presidential decree, su bjectto th e app ro val of th e C oun cil of M inisters, based upo n a justifiedrecommend atio n b y fo ur m embers o f the B oard of D irectors that:a. the person recomm ended for rem oval from office has been absent from tw o

or m ore successive m eetings of the B oard of D irectors of the B ank w ithoutg oo d c au se ;

b . the person recomm ended for rem oval from office is unable to perform thefu nctions of such o ffice because o f an infirmity of body or m ind; or

c. the person recomm ended for rem oval from office has engaged in seriousm is co nd uc t in th e o ff ic e, s ub sta ntia lly p re ju dic in g th e in te re sts o f th e B an k.

4. The Governor, Deputy Governor, or any other m em ber of the Board ofD irectors m ay not be rem oved from office on any grounds other than thosementio ne d in th is a rtic le .

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5. The G overnor or D eputy G overnor m ay resign from office upon giving not lessth an th ree m onths= notice in w ritin g to the C ouncil of M in isters. A ny otherm em ber of the B oard of D irectors m ay resign upon giving not less than onemo nth =s n otic e in w ritin g to th e C ou ncil o f M in iste rs.

6. A ny vacancy on the B oard of D irectors shall be filled by the appointm ent ofanew m em ber of the B oard of D irectors in accordance w ith A rticle 10

g.Article 12 1. T he G overnor, or in his absence the D eputy G overnor, shall chair the m eetings


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m eeting, except that in the event ofan em ergency, m eetings of the B oard ofD irec to rs m ay b e co nv en ed at shor te r no ti ce .

5. A quorum at any m eeting of the B oard of D irectors shall consist of the presenceof at least three m em bers of the B oard of D irectors, including the G overnor orD eputy G overnor. E ach m em ber of the B oard of D irectors shall have one vote.

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6. E xcept as otherw ise provided by this law , decisions of the B oard of D irectors,shall be adopted by m ajority of the votes cast by the m em bers of the B oard. Inthe event of a tie, the C hairm an shall have the deciding vote. O nly m embersw ho are present in person shall have the right to vote. H ow ever, in exceptionalcircum stances, m eetings of the B oard m ay be held by m eans offax, telex, orteleconferencing.

7. SU bject to the quorum requirem ent of paragraph 5 above, no decision of theB oard of D irectors shall be invalidated m erely by reason of the existence of avacancy or tw o at m ost vacancies on the B oard.

8. A ll acts carried out by a person acting in good faith as Chairm an or otherm ember o f th e B oard o f D irec to rs sh all b e c on sid ere d v alid. If an y irreg ularitiesin h is a pp oin tment, e lig ib ility , o r q ua lific atio ns a re d is co ve re d, h e s ha ll b e le ga llya ccountable for such ir re gu la ritie s.

9. The M inister of F inance shall have the right to attend m eetings of the Board ofD irectors of the B ank, but he shall not be entitled to vote.

10. T he m inutes of the m eetings and deliberations of the B oard of D irectors shallbe confidential; how ever, the B oard m ay decide to m ake the outcom e of all orp ar t o f its d elib era tio ns p ub lic .

11. T he m inutes of each B oard of D irectors m eeting shall be signed by the personchairing the m eeting, either the G overnor or the D eputy G overnor, and by the

III

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II-9-IAuthority of the Board of Directors

A rticle 13 T he B oard of D irectors shall exercise the authority vested in it by this law and anyo the r la w. W ith ou t pre ju dic e to th e g en era l na tu re of th is au th ority , th e B oard sh allh ave the f ol low ing pa rt icu la r du ti es and r es ponsi bil iti es :

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1 . T he o ve ra ll d ire ctio n a nd su pe rv isio n o f th e p olic ie s, a dm in istra tio n, a ndo pe ra tio ns o f th e B an k. I2. Periodic assessm ent of the m onetary and econom ic situation in Y em en. T o that

e nd , th e m an ag em en t of th e B an k sha ll rep ort, n ot le ss th an on ce e very m on th ,to th e B oard o f D irecto rs o n th e administratio n an d o peratio ns o f th e B an k, o nth e c on du ct o f its mo ne ta ry a nd re gu la to ry p olic ie s. T he re po rts sh all in clu de[a ss es sments o f] p ric e s ta bility , th e so undn es s o f th e fin an cia l s ystem in clu din gin p articu lar th e b ank in g sy stem o f Y em en , a nd on th e co nd itio n of th e m on ey ,c ap ita l, a nd fo re ig n e xc ha ng e mark etsin clu din g a ll e ve nts a nd c on ditio ns th ath av e o r are ex pected to h ave a sig nifican t effe ct o n the admin istratio n o roperations of the B ank or on the conduct of its policies, or on the financials ystem o r th e a fo remen tio ned ma rk ets .

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3 . D eterm in in g th e m on etary p olicy of Y em en , in clud ing th e o pen-m ark eto peration s by th e B an k, in terest rates for d ep osits at th e B ank an d for d iscou ntsand loans by the B ank, and the reserves and levels of reserves that banks arere qu ired to m ain tain w ith th e B an k. T he B oa rd m ay d eleg ate to th e G ov ern orthe pow er to determ ine the interest rates for deposits at the B ank as w ell as therates fo r d isco unts a nd lo an s by th e B ank .

" ' . ' . ] , . c .-c ; , . .

f1U4 . D eterm in in g th e ex ch an ge rate p olicy an d p ro ced ures fo r determ in in g th e

e xc ha ng e ra te s o f th e d omestic c urre nc y a ga in st o th er c urre nc ie snU

5 . A pp ro vin g a ll reg ula tio ns, gu id elin es, an d instru ctio ns th at are to b e issue d b y


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9. App ro vin g [th e disco un tin g o f in strumen ts] h av in g a m atu rity o f m ore th anthree m onths from the date of their acquisition by the B ank pursuant toA rticle 38 o f th is law , an d ap pro vin g each of the Bank=s loans to, orc on tin ge nt c omm itments fo r th e b en efit of a bank pursuant to A rticle 32 ofth is law.

10. A pproving the by-law s of the B ank.1 1. D eterm in in g th e o rg an iza tio n o f the B an k, its sala ry stru ctu re fo r em plo yees,

a nd co nd itio ns o f emp lo ym en t, as w ell as assumin g g en eral re sp on sib ility fo rpersonnel m atters at the B ank and the pow ers delegated to the P rim e M inisterw ith resp ec t to g ov ernmen t em plo yees.

12. E stablishing a list of senior bank staff w ho are legally eligible for prom otion tothe rank: o f assistant subgovernor or higher, upon the basis of w hich ap re sid en tia l d ec re e w ill b e is su ed .

1 3. E stab lish in g an d clo sin g su bsid iarie s, b ra nch o ffice s, a nd ag en cie s o f th e B an k.14. A pproving the B ank= s estim ated budget.1 5. P ro po sin g in cre ases in th e a uth oriz ed cap ital o f th e B an k, estab lish in g sp ecial

reserves, and determ ining the net incom e of the B ank.16. A pproving the annual reports and financial statem ents of the B ank.17. D eterm ining the debt securities that are suitable for investm ent of the B ank=s

fin an cia l re so urc es a nd issu in g th e c orre sp on din g fin an cia l d oc uments.


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III

3. The Governor shall be th e o ffic ia l re pre se nta tiv e o f th e B an k a nd , in th isc ap ac ity , s ha ll h ave t he fol low ing aut ho rit y: Ia. T o rep resen t the B ank in its relations w ith oth er institutions, inclu din g th e

Government .b . To represent the B ank in person or through an advocate or legal counsel in

any leg al pro ceedings to w hich th e B ank is a party.

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c. T o sign severally or join tly w ith others the agreem ents concluded by theB ank , the bank notes and financial instrum en ts issued by th e B ank , th ere po rts, b ala nc e sh ee ts , a nd o th er fin an cia l sta teme nts, a nd th ecorresp onden ce and other docum ents em an atin g fro m the C en tral B ank , ina cc ord an ce w ith b an kin g re gu la tio ns a nd th e d ec isio ns o f th e b oa rd .

d. T o grant any of the authorities referred to in paragraph 3 of this article toany m em ber of the B oard of D irectors, or to any senior executive of theBank.

4 . T o es ta blish p erm an en t a dv iso ry c omm ittee s o n fin an cial, o rg an iz atio na l, s ta ff,p urc ha sin g, s ale s, a nd c re dit m atte rs, w ith ou t re stric tio n, a t th e h ea d o ffice a ndthe branches, and to determ ine the com position and duties of such comm ittees.

5 . To issue a list of the nam es of those authorized to sign on behalf of the Bankan d to ap point correspo ndent agents in Y em en an d abroad.

qJ6. T o im plem ent or clarify the decisions of the B oard of D irectors and to provide,

at th e su gg estio n o f th e c omp ete nt a uth ority , th e n ec essa ry in fo rm a tio n toex pla in th e ru le s a nd reg ula tio ns iss ue d b y th e B oa rd .

. 7. To nom inate staff for positions at the level of deputy general m anager andh ig he r a nd a pp oin t sta ff a t lo we r lev els, in a cco rd an ce w ith th e ru le s d ete rm in ed


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3. In the absence of the G overnor or pursuant to his express direction, the exerciseby the D eputy G overnor of any of the G overnores authorities shall bec on sid ere d le gal p ursu an t to th is law .

A rticle 17 The G overnor, D eputy G overnor, shall devote their entire w orking tim e to theservice o f th e B ank an d m ay n ot occup y an y profession al o r commercial po sitio nw hile holding office. H ow ever, nothin g in this paragraph prevents them from bein g:1. M em bers or alternate m em bers of any committee or agency appointed by the

G overnm ent to inv estigate any m atter related to the currency or to banking,f in an cia l, o r e conom ic is su es .

" -" 2. Governors, Deputy Governors, or members of the boards of directors of anyin te rn atio na l b ank o r A rab, re gio na l, o r in te rn atio na l fin an cia l in stitu tio n tow hich the G overnm ent m ay belong or w hich it m ay support or recognize.

A rticle 18 The Bank shall pay the G overnor, the D eputy Governor, and the other m em bers ofthe B oard the salaries and bonuses determ ined from tim e to tim e by the Prim eM inister. N o bank em ployee m ay receive any salary o r finan cial supplem ent to hissalary from any source other than the B ank.

A rticle 19 1. No member of the Board in the exercise of his functions shall be considered asre pre se ntin g any commerc ia l, f in an cia l, a gric ultu ra l, in du stria l, o r o th erin terests, w he th er d irec tly o r in direc tly , n or sh all h e re ce iv e d irec tio ns from su chinterests w ith respect to the duties entrusted to him pursuant to this law .

2. M em bers sh all ap prise the B oard fully of an y commercial, finan cial, agricultural,o r in du stria l in terests w ith w hich th ey are d ire ctly o r in dire ctly c on ne cte d, an dthey shall abstain from voting on an y issue related to those interests d uring theB oa rd =s d elib era tio ns; su ch in te re sts, h ow ev er, o nc e d isc lo se d to th e B oard ,


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CUITeDCYA rticle 22 The rial shall be considered th e only currency in Y em en; it shall consist of 100 equal

parts, ea ch ca lled a fils.A rticle 23 The B ank shall determ ine the foreign exchange rate regim e of Y em en in

co nsultation w ith the G overnm ent, and shall fo rm ulate and execu te the exchan gerate policy for Y em en.A rticle 24 The Bank alone shall be entitled to issue banknotes and m int coins in Y em en; the

banknotes and coins issued by the B ank shall be legal tender in Y em en.~ ~ Article 25 1. The banknotes and coins issued by the Bank shall be denom inated in rials, or in

parts of a rial, in accordance w ith A rticle 22 of this law . They sh all b e mad eu sin g th e materia ls, sh ap es, d esig ns, p atte rn s, a nd d istin ctiv e mark s d ecid ed o nby the B oard and approved by the C ouncil of M inisters.

2. The B ank alone shall be entitled to issue special or commem orative coins inaccordance w ith a decree of the C ouncil of M inisters, based upon the B oard=srecommendation.

A rticle 26 1. W ith due regard for the provisions of this article, banknote issued by the B ank,p ro vid ed th at it h as n o d efe ct, impe rfe ctio n, o r d elib erate d isfig uremen t, sh all b econsidered legal ten der in accordance w ith its nom in al v alue fo r purposes ofp ay m g :a. Any am ount in a denom ination of one rial or m ore;b. A mounts in denom inations ofless than one rial, w hether paper or coins, as


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A rticle 27 1. The Bank shall pay the value ofbanknotes and coins dam aged by norm al wearand tear, but m ay refuse to do so ifth e dam age is caused b y tam perin g.

2. F or purposes of this law , tam pering in relation to coinage m eans the reductiono f its size or w eig ht (ex clu siv e o f no rm al w ear and tear), d isfig urem en t b yin scrib in g, im pressin g, o r p erfo ratio n, ev en w hen this d oes n ot resu lt in aredu ction in its w eig ht o r size.

A rticle 28 T he B ank shall take the necessary steps to m elt or destroy any coin that has beenw ithdraw n from circulation or tam pered w ith; it m ay destroy or bum any banknotesth at h av e b ee n w ith drawn from c irc ula tio n o r d elib era te ly d isfig ure d, o r th at th eB ank co nsid ers u nfit fo r u se.

A rticle 29 A ny contract, sale, paym ent, draft, deed, or m onetary guarantee docum ent, and anytran sactio n, d eal, or an y o th er m atter h av ing a co nnectio n w ith m on ey o r en tailin gpaym ent in m oney or an obligation to pay in m oney shall be established ande xe cu te d o n th e b as is o f Y emeni c urre nc y, u nle ss e xp re ssly stip ula te d o th erw ise .

Chapter 6Relations with the Government and Other InstitutionsA rticle 30 1. The Bank shall be the bank of the Governm ent as well as its financial agent and

adviser.2. The B ank m ay serve as the bank and the financial agent of any public institution,

in accordance w ith the arrangem ents agreed upon in this regard w ith theins ti tu tion concerned .

A rticle 31 1. The B ank m ay, in its capacity as the bank and financial agent of the G overnm ento r o f a ny pub lic in stitu tio n:


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d . E xercise, o n b ehalf of the G ov ernment, resp onsib ilities related to th e p ublicdebt, including the issuance of bonds, the paym ent of interest on them , andthe reco very o f th e valu e o f lo an securities an d o th er g ov ernment secu rities.

e. B uy, sell, transfer, or take into safekeeping checks, drafts, or otherinstruments.f C ollect any returns in the form of assets or the interest on them resulting

from the sale of securities or other possessions of the G overnm ent or publicin stitu tio ns an d p ay ab le to th em .

g. B uy, sell, transfer, or receive for deposit gold and foreign exchange.h. C ollect the returns on petroleum and any other natural resources.I. Sup erv ise an d re gu late th e su bsc rip tio n o f g ov ernmen t in ve stm en t sh are s;

m anage the shares and distribute profits at the end of the year.2. The Bank m ay, on such term s and conditions as it shall agree w ith the M inister

o f F in ance, charg e fo r its serv ices as b an k o r finan cial ag en t-of th e G overnm en t.3. The Bank m ay, on such term s and conditions as it m ay agree w ith the M inister

of Finance, pay interest on the credit balances in the governm ent accounts; itm ay p ay in terest from n et earn in gs o n the cred it b alan ces of p ub lic in stitu tiondeposits, the rate of w hich shall be established from tim e to tim e by a decisiono f th e B oard o f D irectors.


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the an nu al a ve ra ge o f th e b ud get= s o rd ina ry rev enu e fo r the th re e fina ncia l y ea rsimmed iate ly p rece din g for w hich a cc ou nts are av ailab le . T he matu ritie s o f su chloans shall not exceed six m onths. P ublic debt existing at the tim e this law isi ssued sha ll be exem pted from this lim it and shall be handled through anagreem ent betw een the B ank and the M inistry of F inance.

II

3. T he B ank m ay grant the G overnm ent special loans w ith longer m aturities form embersh ip fe es an d sim ila r p aymen ts resu lting from o r in cid en ta l to th eR ep ub lic o f Y emen= s membe rs hip in in te rn atio na l o rg an iz atio ns .

4. B ank em ergency loans granted to the G overnm ent and actually used shall bedenom inated and m ade payable in rials only. F or each em ergency loan theremust be a w ritten em ergency loan agreem ent executed betw een theG overnm ent, represented by its M inister of F inance, and the B ank. T heag re emen t sh all cle arly state th e p rin cip al amo unt o f the emerg en cy lo an, itsm atu rity , an d th e ap plica ble ra tes o f in te rest an d o th er ch arg es.

5. F or the purposes of this article, ordinary governm ent revenues shall not includelo an s, g ra nts , a nd o th er fo rms o f fin an cia l a ss is ta nc e.

6. Ifthe B ank believes that there are risks involved in any aspect of the m onetarypolicy or that the lim it stipulated in paragraph 2 above is in danger of beingexceeded, the B ank shall subm it a report on these risks to the C ouncil ofM inisters and the C abinet, together w ith such recommendations as it m ay deemap prop riate to fo re stall o r o th erw ise rem ed y th e situ atio n, a nd av oid itsre cu rre nc e in th e fu tu re .

- -,A rticle 33 P urchases by the B ank on its ow n behalf of debt securities issued by the

G overnm ent shall be treated as B ank loans to the G overnm ent and therefore shallbe subject to the overall lim its specified by A rticle 32 of this law , except if and tothe extent that such purchases are consistent w ith the m onetary policy objectives ofthe B ank of m aintaining price stability or are required for investing assets of the


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IA rticle 36 1. The B ank shall advise the G overnm ent on any m atter related to its jurisdiction, Ia uthority , o r dutie s inaccordance w ith this law or any other law ; it shall alsohave the duty of advising the G overnm ent w henever it considers that anyquestion related to those m atters is likely to affect the Bank=s attainm ent of its IImain obje ctiv es a nd tasks as referred to inA rticle 5 of this law . U

2. The Government may ask the Bank for its advice on any question related to itsju risd ictio n o r au th ority , Y emen=s fin an cial o r cred it p ositio n, o r an y p ro po sals,m easures or procedures related to them , and the Bank shall provide its adviceaccordingly.

Chapter 7Relations with Banks and Financial InstitutionsA rticle 37 1. N o person m ay conduct banking business, including exchange activities, unless

licen sed b y th e B an k.2. The Bank shall act as a banker=s bank; it may open accounts for banks, take

deposits from them , and collect cash and other m onetary claim s payable to andb y th em .

~

T l.d

3. The Bank shall exercise its authority over comm ercial banks to ensure that theyare properly m anaged and that they m eet their o bligations to their depositorsa nd o th er cre dito rs .

4. W ith due regard for the provisions of this law, the Bank m ay provide additionalserv ices fo r b an ks, in clu din g clearan ce, an d su pp ly th em w ith facilities fo rhold ing deposi ts .

Article 38 The Bank may:

I


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b . A certifica te o f d ep osit o r a ny o th er d ocumen t p ro vin g a bso lu te own ersh ipw ith re sp ec t to b asic c ommoditie s o r o th er c omp le te ly a nd p ro pe rly in su re dgoods, prov ided that th e B ank from tim e to tim e determ ines the m ax im umperc en tage o f advance s with respect to the cu rrent price of su ch goods andcommodities.

c. T reasury bills or o ther bond s issued or guaranteed by a foreign gov ernm ent.d. B onds issued or guaranteed by th e G overnm ent.

A rtic le 3 9 l.W ith due regard for the provisions of A rticle 38 of this law , the B ank m ayd ete rm in e th e g en era l te rm s a nd c on ditio ns fo r th e p ro visio n o f c re dit fa cilitie sto b an ks. T he B an k sh all, in p articu lar, d ete rm in e an d p ub lish th e d isc ou nt ratesre qu ire d o n re disco un t in strumen ts p ursu an t to A rtic le 38 o f th is law.

2. W ithout prejud ice to the prov isions of the Islam ic B ank ing L aw an d them eth od s u se d b y Islam ic b an ks, th e B an k m ay d eterm in e d iffe ren t te rm s a ndconditio n s, in clud ing d is coun t r ate s, e sta blis h d iffe rent lim its fo r v arious k indso f tra nsa ctions , a nd dete rm in e th eir ma tu ritie s.

A rticle 40 T he C en tral B an k m ay p ro vid e fin an cial fa cilitie s to Islamic b an ks w hen th ey a re inn eed o f liq uid ity b y d ep ositin g fu nd s fo r in vestm en t w ith d ue d ates o f n ot m ore th ansix m onths and no t less than one m onth, from w hich th e b anks ob tain earn ings atth e en d o f th e ye ar. Su ch fa cilitie s m ust b e co ve red b y g ua ran tees th at a re p erm itte dby Is lam ic banks .

A rticle 41 1. W ith due regard for the provisions of this article and the provisions of theIslam ic B ankin g L aw and m ethods used by Islam ic banks, the B ank m ay fromtim e to tim e ask b anks to m aintain a m inim um of reserves against dep osits ando th er sim ila r lia bilitie s d ete rm in ed b y th e B an k to th is e nd . T he se re se rv es sh all


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3. The B ank shall notify the banks in w riting of at least 30 days beforeimpleme ntin g th e re qu ireme nts o f th is A rtic le o r in cre asin g th e ratio s esta blish edin a ccord an ce w ith its p ro vis io ns .

4. The C entral Bank m ay im pose on any bank that fails to m aintain the balancesrequired pu rsuan t to th is A rticle a ch arg e not exceeding 5 percent of theshortfall for each day th at the sh ortage persists; this charge m ay be d ed uctedfrom any balance or am ounts due to the bank in question or it m ay be recoveredas a civi l debt.

A rticle 42 1. The Bank may, when it d eems n ec es sa ry in e xc ep tio na l c irc ums ta nc es ,determ ine the m axim um and m inim um lim its of the interest rate for the netearn ing s paid by th e banks and fin ancial institution s co ncern ed on any ty pe ofdeposits they receiv e in Y em en, in acco rdance w ith other arran gem ents; th eb an ks a nd fin an cia l in stitu tio ns c on ce rn ed sh all ad here to th ose lim its.

2. D ecrees issued pursuant to this article m ay apply to all banks and financialin stitu tio ns c on cern ed , o r to a ll b an ks or a ll fin an cia l in stitu tio ns c on ce rn ed , o rto an y sp ecific ty pe o f th e fin an cial in stitu tio ns c on cern ed ; th ey sh all ap plyu nifo rm ly to all co nce rn ed b an ks an d fin an cia l in stitu tio ns th at ca r ry out thetran sactions specified in the decision s. T hese decrees and the dates that theyenter into force shall be published in the O fficial G azette and in at least onen ew spaper pub lished in th e capital, S ana=a, w here the headquarters of the B ankis loca ted .

A rticle 43 1. T he B ank m ay, w hen it deem s necessary in exceptional circum stances, issueo rders specifying th e vo lum e an d term s and cond ition s of th e credit facilitiesp rovided by bank s in Y em en; banks sh all com ply w ith th ese ord ers.


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2. The o rders issu ed in acco rd ance w ith th is A rticle sh all n ot requ ire th e fin ancialin stitu tio ns co nc ern ed to ta ke a ny ste ps to re du ce e xistin g c re dit fa cilitie s b efo reth eir ma tu rity . T hey sh all ap ply u nifo rm ly to all in stit ut io ns p rovid in g th e c re ditfacilities sp ecified in the o rd ers. T he o rd ers an d th e dates th at they enter in tofo rce sh all b e p ub lished in the O fficial G azette an d in at least o ne n ew spap erp ublished in the capital, S an a= a, w here th e h ead quarters of the B ank is lo cated .

A rticle 45 1. A ny bank or specified financial institution shall provide the C entral B ank, at thetim e and in the m anner the B ank determ ines, w ith any inform ation or statem entsit req uires in the pu rsu it of its fun ctio ns an d th e ex ercise of its autho rity.

2 . T he B ank m ay publish, com pletely or in part, and at the tim es it determ ines, the, inform ation provided pursuant to paragraph 1 of this article. It sha ll no t,h owev er, p ub lish a ny in fo rmatio n rev ea lin g th e fin an cia l situ atio n o f a ny clie nto f any ban k or sp ecified fin an cial institu tio n, un less it receiv es p rio r ap pro val inwriting.

3. T he B ank shall be responsible for the com pilation of the country=s balance ofp aymen ts [a nd in tern atio na l in ve stme nt p ositio n] sta tistic s. In th is re gar d, it sh allb e m and ato ry o n th e p art of p ublic auth orities, finan cial in stitutio ns, an d otherlegal entities to supply any inform ation and m aterials to the B ank as it m ayrequire from tim e to tim e and in the m anner it prescribes, in order to allow theB ank to carry ou t this respo nsib ility. T he in fo rm atio n an d material su bm itted tothe B ank sh all b e co nsidered strictly co nfid en tial an d sh all b e used o nly forstatistica l p urp ose s. N on complian ce w ith th e Bankes re qu est a nd re po rtin g fa lseinform ation sh all con stitu te a legal o ffense p un ish able b y a co urt o f law .

A rtic le 4 6 1. In the event that any bank fails to com ply w ith any of the requirem ents ofA rticles 4 1, 4 2, o r 43 of this law , o r th at an y sp ecified fin an cial in stitution fails


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A rticle 47 1. The foreign exchange rate regim e of Y em en shall be determ ined by the Bank inco nsu ltatio n w ith th e G ov ernmen t, an d sh all b e c on sisten t w ith th e o blig atio nsof any international treaty to w hich the G overnm ent is a party or to w hich it hasadhered. T he B ank m ay declare an external value for the rial and anysub sequen t change insaid va lue . Ifthe B ank elects n ot to declare an ex ternalv alu e for the rial, the exchange rates for the rial against o th er c urre nc ie s sh all b ed ete rm in ed b y th e m ark et.

2. The exchange rate policy of Yem en shall be form ulated and executed by theBank.


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3. T he B ank shall not im pose restrictions on the purchase, sale, holding, ortra nsfe r o f fo re ig n e xc han ge ex ce pt in th e fo llowin g ca ses:a. T he B ank shall be en titled to restrict tem porarily the pu rch ase, sale, ho lding,

o r tran sfer o f fo reig n ex ch an ge if : in the opinion o f the B ank , th e im po sitionof such restrictio ns is w arranted to protect the level of the official reserves.

b. A ny restrictions under paragraph 3(a) above m ay be introduced only for aperiod not exceeding 6 m onths, and m ay be extended for another period of6 m onths only w ith the unanim ous approval of the m em bers of the B oard.

c. W henever the Bank exercises its pow ers under paragraph 3(a) above, it shallsubm it a report to the Council of M inisters and the H ouse ofR ep re sen ta tiv es w ith in sev en d ay s, an d ev ery th re e mon th s th ere afte r,describin g the cau ses w hich have led to th e in tro duction o f such exchangerestrictio ns to ge th er w ith su ch rec ommen da tio ns as it c on sid ers n ec essa ry toremedy th e s itu atio n.

d. T he restrictio ns introdu ced und er th is article shall be con sistent w ith theo blig atio ns req uire d b y Yemen u nd er a ny in tern atio nal a gre emen t o f whichit is a party or to w hich it has adhered.

A rticle 48 T he B ank shall be responsible for:1 . Issuing rules and regu lations go vernin g foreign exchange m ark et operations.2 . L ic en sin g, re vo kin g th e lice nse s o f, su perv isin g, an d reg ulatin g fo reig n

ex ch an ge d ea le rs, in clu din g b an ks, p ursu an t to ex ch an ge reg ulatio ns issu ed b yth e B an k.


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a. Gold;b. Foreign exchange in the form of notes and coins or bank balances held

abr oad in fo re ign currenc ie s;c. A ny o ther in ternatio nally recognized reserv e asset, i nc luding the enti tlemen t

to m ake reserve tranche purchases from the International M onetary Fundand the Gov ernment= s SDR h oldings;d. B ills of exchange and prom issory notes, payable in foreign currencies; ande. D ebt securities issued or guaranteed by foreign states, central banks, or

in tern atio nal fin an cial o rg an iza tio ns d en om in ate d in fo re ig n cu rren cie s a ndto be p aid in th e same c urre nc ie s.

2. The Bank shall endeavor to maintain its international reserve at a level w hich, inthe Bank=s opinion, shall be adequate for the execution of the m onetary andexchange rate policies of Y em en and for the prom pt settlem ent of the country=sinternational transactions.

3. If said international reserve has declined or, in the opinion of the Bank, is indanger of declining to such an extent as to jeopardize the execution of them onetary or exchange rate policies of Y em en or the prom pt settlem ent of thecountry= s international transactions, the B ank: shall subm it to the C oun cil ofM inisters a report on its official foreign reserve position and the causes w hichhave led or m ay lead to such a decline, together w ith such recomm endations asit co nsiders necessary to rem ed y th e situatio n.


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Article 53 T he G overnm ent shall not hold any reserves offoreign assets.Chapter 9

Authority and Other Operations of the Central BankA rticle 54 A ny loans or investm ents contracted by the G overnm ent or any public institutions,

agencies, or corporations and guaranteed by the B ank shall be con sideredemerg en cy lo an s, as d escrib ed in A rticle 32 of this law .Article 55 1. T he B ank shall be prohibited from :

a. E ngaging in commerce or having any direct interest in any commercial,ag ricu ltu ra l, in du strial, o r sim ila r p ro je ct, u nless it is ex pressly au th orized to d oso by the provisions ofthis law , or in order to obtain paym ent of any debt ow edto it.

b. Selling, ow ning, or leasing any real estate, except as buildings of the B ank [sic].2. Should the B ank have any interest falling under the prohibitions of paragraph 1

o f th is article, it sh all d isp ose o f su ch in te rest at th e earliest p ossib leopportunity.

Chapter 10Accounts

A rticle 56 1. The Bank=s financial year shall conform to that of the G overnm ent and theB ank= s accounts shall be closed at the end of each financial year.


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him w ith a report on them . T he Bank s h a 1 l provide all necessary fac il it ie s forsa id inspection.Article 57 1. The B an k sh all, w ith in three mon th s after the clo se o f each of its fin an cial years,

su bm it to th e C ou ncil o f M in iste rs and th e Hous e o f Rep re se nta tiv es :a. A c opy o f its fin an cia l s ta temen ts certified by i ts aud it or s.

b. A report on the state of the economy and a report on its operations anda ctiv itie s during th at y ea r.

2. T he B ank sh all, as soon as possible after the last w orking day of each m onth butin a ny e ve nt w ith in 15 w orking days, prepare and subm it to the C ouncil ofM in iste rs a p ro fo rma f in an cia l s ta tement a s of the end of that m onth.

3. Upon th eir su bm issio n, th e B an k sh all p ub lish th e fin an cial statem en ts an dre po rts re fe rre d to in p ara gra ph s 1 an d 2 above. Itmay also pu blish such oth errepo rts an d stu dies o n financial an d eco nomic issues as it m ay d eemappropriate.

4. With in six mon th s after th is law sh all en ter in to fo rce, an d sem ian nu allythereafter, the B ank shall deliver to the C ouncil of M inisters and the H ouse ofR ep resen tativ es an d sh all p ub lish a p olicy statem en t co ntain in g th e fo llowin g:a. A d escrip tio n an d ex plan atio n o f th e m onetary po licies to b e follow ed by th e

B an k d urin g th e n ex t six -m onth p eriod .b. A d escrip tio n o f the p rin ciples that the B an k p ro poses to fo llow in defin in g

and executing m onetary policy during the next tw o years, or such longerperiod of tim e as the B ank m ay decide.

IIIo

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A rticle 60 N o Bank that includes in its nam e the w ords A central.a A govemment.a A reserve.sA state.z A Y e m e n . s or A The Republic of Y e m e n . a may operate in Y em en, exceptw ith the w ritten pennission of the B ank.

A rticle 61 T he im plem enting regulations for this law shall be issued by the B ank and shall bep ub lish ed in th e O fficial G azette. Implemen tatio n o rd ers sh all also b e issu ed .

A rticle 62 The provisions of Law N o. 21 of 1991 on the Central Bank of Yem en and all legaltexts conflicting w ith the provisions of this law are hereby revoked.

Issued by the O ffice of the P residentin Sana=a on 25 16 12000

A rticle 63 This law shall enter into force from the date on w hich it is issued and shall bep ub lish ed in th e O f fic ia l Gaz ette .

A li A bd ullah S alehPresident of The Republic

:i...J

Central Bank of Yemen Law No. 14 (2000)

Documents

Transcript of Central Bank of Yemen Law No. 14 (2000)