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Rabat – The government council adopted on Thursday a new bill on the status of Bank Al Maghrib (BAM), recasting the Moroccan central bank’s fundamental texts to allow it more independence.
As the exchange rate regime reform is looming over the Moroccan economy, the recast bill of the central bank has just been approved by the government council.
The bill, which was under the consideration of the government since its introduction by the Ministry of Economy in 2015, provides several provisions designed to give BAM more autonomy and independence, allowing it more advantages in regard to its financial stability and exchange rate policy.
“Following the lessons learned from the 2009 financial crisis,” the bill is to entitle the Moroccan central bank with news status “in line with international standards.”
Taking into account the recent changes in Morocco, and in accordance with its new constitution and legislation, the bill is devoted to redesigning the status of BAM by expanding its missions to contributing to the prevention of systemic risk and to strengthening financial stability and to adapt its instruments of intervention to this mission, said government spokesman Mustapha El Khalfi.
Total autonomy
The bill’s main aim is to hand the central bank complete autonomy by giving it the authority to define price stability. Thus, BAM will have the “power to conduct monetary policy in complete independence.”
It also proposes a new provision allowing regular consultation between the Ministry of Economy and Finance and the Governor of Bank Al-Maghrib with a view to ensure the coherence of macro-prudential policy and monetary policy.
In return for strengthening its independence, the bill foresees the introduction the parliamentary control by allowing a hearing of the governor by the commissions in charge of the finances.
However, the bill limits the scope of the Government Commissioner’s audit to financial transactions, and makes the allocation of the available net profit conditional upon the necessary withdrawals from an agreement between the bank and the Ministry of Finance.
Dirham Liberalization
The adoption of this bill seems to come in due time for the imminent launch of the exchange rate regime reform.
The text clarifies BAM’s role in exchange rate policy and the easing of the management of foreign exchange reserves, specifying that the “BAM implements the exchange rate policy in the framework of the exchange rate regime and the guidelines set by the Minister of Finance, after consulting the bank.”
In this context, BAM has also been authorized to use foreign exchange reserves to “defend or preserve the value of the dirham in the event of a flexible exchange rate regime,” explains the bill’s note presented by the Ministry of Economy and Finance.
