The Central Bank of the Dominican Republic ( es, Banco Central de la República Dominicana, BCRD) was established by the Monetary and Banking Law of 1947 as the

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...

of the

Dominican Republic The Dominican Republic ( ; es, República Dominicana, ) is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean region. It occupies the eastern five-eighths of the island, which it shares with ...

, responsible for regulating the country's

monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are ...

and

banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

system. The Bank's headquarters is in Santo Domingo, and its current governor is Héctor Valdez Albizu.

Establishment and objectives

Organic Law no. 6142 of December 29, 1962, authorized the central bank to promote and maintain favorable monetary, foreign exchange and credit conditions for the stability and development of the national economy. The central bank's functions include regulating market liquidity levels by: determining deposit reserve requirements for banks; implementing lending limits when necessary; and issuing negotiable securities. Additional functions include controlling movements of the

exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...

and introducing resolutions pertaining to the financial system.

Activities and structure

The BCRD implements all changes to banking regulation proposed by the Monetary Board (''Junta Monetaria'') which is the highest body of authority within the institution. The Board consists of ten members, all of which are appointed by the executive. The governor of the central bank heads the Monetary Board while the Ministry of Finance and the Ministry of Industry and Commerce each have a seat on the Board. The BCRD Governor is appointed by the executive for a period of two years, though with Héctor Valdez Albizu there has been continuity at this senior post for several years despite political administration changes. Albizu was the BCRD governor from 1994 until 2000, again holding the post from August 2004. Since late 1993, BCRD has worked with the sponsorship of the

Inter-American Development Bank The Inter-American Development Bank (IDB or IADB) is an international financial institution headquartered in Washington, D.C., United States of America, and serving as the largest source of development financing for Latin America and the Carib ...

to improve several areas of banking practice.

Performance and reform since the 1990s

Monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...

during the 1990s was conducted within a framework of limited central bank autonomy and a managed floating exchange rate regime. A key objective of the BCDR was price stability in conjunction with real output growth and reserve accumulation, such that the stock of BCRD net domestic assets became the targeted policy instrument. Liquidity was managed directly through credit controls and freezing asset reserves. BCRD also intervened in the private foreign exchange market, smoothing the volatility of the exchange rate. However, the monetary authorities recently moved towards the

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, t ...

as its indirect monetary policy instrument, namely through issuing central bank paper (''certificados de participacion''), with prices determined at

auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition e ...

. The

macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, an ...

situation suffered a major shock in 2003 with the banking crisis and subsequent bail out by the BCRD, which guaranteed all Baninter (one of the major banks that failed) deposits and providing liquidity to two other banks at a total cost to the budget equivalent to 21 percent of the GDP. The banking crisis led to a major capital flight, a sharp currency

depreciation In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the ...

, high

inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...

and significant fiscal pressures (exacerbated by an ongoing electricity crisis), together creating large macroeconomic imbalances and an environment of uncertainty and perceived risk. In October 2003 the BCRD raised the commission on foreign exchange transactions for purchasing imported goods to 10 percent and subsequently to 13 percent at the beginning of 2005.Dominican Republic: Review of Trade and Labor Competitiveness, World Bank 2005

Governors

* Jesús María Troncoso, 1947 - 1951 * Wenceslao Troncoso, 1951 - 1952 * Manuel Ruiz Tejada, 1952 - 1953 * José Ernesto García, 1953 * S. Salvador Ortiz, 1953 - 1954 * José Joaquín Gómez, 1954 - 1956 * Milton Messina, 1956 - 1957 * Arturo Despradel, 1957 - 1958 * Juan A. Morales, 1958 * Virgilio Álvarez Sánchez, 1958 - 1959 * Oscar G. Ginebra Henríquez, 1958 - 1960 * Manuel V. Ramos, 1960 - 1961 * Silvestre Alba de Moya, 1961 * A. Amado Hernández, 1961 - 1962 * José Joaquín Gómez, 1962 - 1963 * Diógenes H. Fernández, 1963 - 1976 * Fernando Periche, 1976 - 1978 * Eduardo Fernández, 1978 - 1980 * Carlos Despradel, 1980 - 1982 *

Bernardo Vega Julio Bernardo Vega de Boyrie (born February 23, 1938), most known as Bernardo Vega, is a Dominican academic and politician. Early life Bernardo Vega was born in Santiago de los Caballeros, Dominican Republic on February 23, 1938. He is the son ...

, 1982 - 1984 * José Santos Taveras, 1984 * Hugo Guiliani Cury, 1984 - 1986 * Luis Julián Pérez, 1986 - 1987 * Roberto Saladín, 1987 - 1989 * Guillermo Caram, 1989 - 1990 * Luis F. Toral Córdoba, 1990 - 1993 * Mario Read Vittini, 1993 - 1994 * Héctor Valdez Albizu, 1994 - 2000 * Francisco Guerrero Prats-Ramírez, 2000 - 2003 * José Lois Malkún, 2003 - 2004 * Héctor Valdez Albizu, 2004 -

Notes

External links

*
Central Bank of the Dominican Republic official site
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