Banco de Cabo Verde (Bank of Cape Verde)

September 8, 2010Central Banksby EconomyWatch

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The Banco de Cabo Verde or the Bank of Cape Verde was established with the

main mission

of maintaining the stability of prices in the Cape Verde region. With time, the bank has assumed greater importance in the Cape Verdean economy as it strives to promote liquidity and proper functioning of the financial system in the country. The country has a service-oriented economy, with commerce, transport and public services accounting for almost 70% of the GDP. The country's low per capita GDP reflects a poor natural resource base.

The Bank of Cape Verde was established as the Treasury Repository and Central Bank of the country. The bank serves as the Central Bank of the country, although with curtailed powers as the Cape Verdean currency is linked to the Euro, and the bank doesn't have much say in this. The Bank of Cape Verde, in order to facilitate competition and promote development of a competitive financial sector in the country, also licenses banks and other financial institutions.

The bank's Organic Law mandates the Central Bank to work in association with the government in defining and implementing exchange and economic policies and in directing and overseeing the functioning of monetary, financial, and exchange markets. Banco de Cabo Verde or the Bank of Cape Verde seeks to further the main objective of the monetary policy of Cape Verde, which is maintaining price stability and regulating the money supply.

The BCV discarded the administrative methods of fiscal controls in 1999 and started managing monetary issues through indirect methods, like mandatory cash reserves and rediscount rates. At present, the Central Bank uses market mechanisms exclusively for the purpose of monetary management.

 

 

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