Central Banking and Financial Stability at a time of Global Crisis (the Role of Reserve Management)

General Remarks

Central banks impact our daily lives in many ways with their role to promote economic and financial welfare of citizens, but their operations are even more critical during a crisis. The global challenges presented by the COVID-19 pandemic make the role of central banks crucial to maintaining economic and financial stability. Central bank reserves provide an essential buffer against uncertain economic outcomes and help protect against economic shocks to promote trade, maintain price stability, and attract foreign investment. Effective reserve management supports the broader mission of central banks to set targets for unemployment, inflation, and interest rates to ensure a healthy economy with full employment and favorable conditions to promote investments and the conducting of business.

The central bank has the responsibility to maintain economic stability during the uncertain times of a global crisis, but an effective response is impossible without proper reserve management. Strengthening governance in decision making, along with improved risk measures, and proper accounting frameworks within central banks are crucial to promote financial stability. But proper reserve management is not only important during times of crisis. As the world economy moves to recover from the consequences of COVID-19, central banks need to continue on the path theyre on to implement sound reserve management practices and develop their capabilities to ensure long-term stability, in good times and in bad.

1. Define reserve management and explain how reserve management influences central banks decisions to restore stability in the financial stability in the economy.
2. In what way(s) the central bank is powerful? Identify some of the factors that make the central bank influential over decisions concerning the societys socio-economic development.
3. How does the Central Bank of Bahrain conduct monetary policy? Can you provide some examples about the instruments used by the central bank of Bahrain to influence the macroeconomic variables in the economy?
4. What are the major challenges and opportunities facing banks in the digital age? What does deep-tech such as artificial intelligence and machine learning offer?
5. Where and how can Fintic play a meaningful role in key Islamic financial services such as Takaful, Zakat and Waqf?