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Main functions and activities

Main functions and activities

The principal tasks of the CBA
The principal tasks of the CBA, as stipulated in the Central Bank Ordinance (A.B. 1991 No. GT 32), are to:

  • Conduct monetary policy;
  • Supervise the financial system;
  • Issue bank notes;
  • Issue coins on behalf of the government;
  • Act as the banker for the government;
  • Be the central foreign exchange bank and, as such, to regulate the flow of payments to and from other countries; and to advise the Minister of Finance on financial matters.

The Monetary Policy of the CBA

The Centrale Bank van Aruba has a fixed exchange regime and there are several instruments available for the effective execution of its monetary policy. One of its most important instruments is the reserve requirement, which is used to either mop up from or inject liquidity into the banking sector to ultimately promote financial stability. 

The monetary policy decision to either increase or decrease the reserve requirement is based on the continuous monitoring and sound analysis of several key economic and financial indicators. These include, e.g., the adequacy of international reserves, the current account coverage ratio, short-term and medium-term economic growth forecasts, inflation trends, tourism foreign exchange earnings, credit developments, commercial bank liquidity, and the government financial operations.

The Bank performs these tasks through a variety of activities, which include:

  • Formulating and implementing monetary policy and related measures through, among other things, regulating bank credit and liquidity;
  • Supervising the activities of the commercial banks and other financial institutions by, inter alia, monitoring their liquidity and solvency to protect the interests of depositors and policyholders, and to promote monetary and financial stability and integrity in Aruba;
  • Managing Aruba's official gold and foreign exchange reserves;
  • Regulating international payments according to the State Ordinance on foreign exchange transactions (A.B. 1990 No. GT 6);
  • Bringing bank notes into circulation to meet the needs of businesses and the general public;
  • Issuing treasury bills and government bonds as an agent for the government; and
  • Monitoring economic and financial developments.