The Central Bank of the Dominican Republic (, BCRD) was established by the Monetary and Banking Law of 1947 as the

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

of the

Dominican Republic The Dominican Republic is a country located on the island of Hispaniola in the Greater Antilles of the Caribbean Sea in the Atlantic Ocean, North Atlantic Ocean. It shares a Maritime boundary, maritime border with Puerto Rico to the east and ...

, 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: med ...

and

banking A bank is a financial institution that accepts Deposit account, 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 m ...

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 The foreign exchange market (forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. By trading volume, it i ...

and

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

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 ...

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 development finance institution headquartered in Washington, D.C., United States of America. It serves as one of the leading sources of development financing for the countri ...

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 affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

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 Liquidity is a concept in economics involving the convertibility of assets and obligations. It can include: * Market liquidity In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quic ...

was managed directly through

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, ...

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 Trade, buying and selling Good (economics), goods or Service (economics), services by offering them up for Bidding, bids, taking bids, and then selling the item to the highest bidder or buying the item from th ...

. The

macroeconomic Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/ GDP ...

situation suffered a major shock in 2003 with the banking crisis and subsequent bail out by the BCRD, which guaranteed all

Baninter Banco Intercontinental (or BANINTER) was the second largest privately held commercial bank in the Dominican Republic before collapsing in 2003 in a fraud tied to political corruption. Ramón Báez Figueroa and expansion of BANINTER Banco Interco ...

(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 Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performance o ...

. The banking crisis led to a major

capital flight Capital flight, in economics, is the rapid flow of assets or money out of a country, due to an event of economic consequence or as the result of a political event such as regime change or economic globalization. Such events could be erratic or ...

, a sharp currency

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

, high

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

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 José is a predominantly Spanish and Portuguese form of the given name Joseph. While spelled alike, this name is pronounced very differently in each of the two languages: Spanish ; Portuguese (or ). In French, the name ''José'', pronounced , ...

, 1954–1956 *

Milton Messina Milton may refer to: Names * Milton (surname), a surname (and list of people with that surname) ** John Milton (1608–1674), English poet * Milton (given name) Places Australia * Milton, New South Wales * Milton, Queensland, a suburb o ...

, 1956–1957 *

Arturo Despradel Arturo is a Spanish and Italian variant of the name Arthur. People *Arturo Alessandri (1868–1950), Chilean politician and president *Arturo Álvarez (footballer, born 1985), American-born Salvadoran footballer *Arturo Álvarez (footballer, born ...

, 1957–1958 * Juan A. Morales, 1958 * Virgilio Álvarez Sánchez, 1958–1959 *

Oscar G. Ginebra Henríquez Oscar, OSCAR, or The Oscar may refer to: People and fictional and mythical characters * Oscar (given name), including lists of people and fictional characters named Oscar, Óscar or Oskar * Oscar (footballer, born 1954), Brazilian footballer J ...

, 1958–1960 *

Manuel V. Ramos Manuel may refer to: People * Manuel (name), a given name and surname * Manuel (Fawlty Towers), Manuel (''Fawlty Towers''), a fictional character from the sitcom ''Fawlty Towers'' * Manuel I Komnenos, emperor of the Byzantine Empire * Manuel I ...

, 1960–1961 * Silvestre Alba de Moya, 1961 * A. Amado Hernández, 1961–1962 *

, 1962–1963 *

Diógenes H. Fernández Diogenes (412–323 BCE) was a Greek philosopher and one of the founders of Cynic philosophy. Diogenes may also refer to: People * Diogenes of Apollonia or Diogenes Apolloniates (c. 460 BCE), philosopher * Diogenes of Athens (tragedian) (late ...

, 1963–1976 * Fernando Periche, 1976–1978 * Eduardo Fernández, 1978–1980 * Carlos Despradel, 1980–1982 * Bernardo Vega, 1982–1984 *

José Santos Taveras José is a predominantly Spanish and Portuguese form of the given name Joseph. While spelled alike, this name is pronounced very differently in each of the two languages: Spanish ; Portuguese (or ). In French, the name ''José'', pronounced , ...

, 1984 * Hugo Guiliani Cury, 1984–1986 *

Luis Julián Pérez Luis is a given name. It is the Spanish form of the originally Germanic name or . Other Iberian Romance languages have comparable forms: (with an accent mark on the i) in Portuguese and Galician, in Aragonese and Catalan, while is archaic ...

, 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–present

Notes

External links