Monetary Policy Formulation and Decision Making

Da Afghanistan Bank is responsible and fully empowered to make the monetary policy decisions in Afghanistan. According to Article 2.1 of DAB Law: "The primary objective of Da Afghanistan Bank shall be to achieve and to maintain domestic price stability." Similarly, as per the article 2 of the Law, one of the basic tasks of Da Afghanistan Bank is to formulate, adopt and execute the monetary policy of Afghanistan.

Based on the articles of the Law, Da Afghanistan Bank is responsible for adoption and formulation of Monetary Policy in Afghanistan. For this purpose, Monetary Policy Committee (MPC) is established and is chaired by the Governor of DAB, First Deputy Governor acts asDeputy Chairman, members of the Supreme Council as members and Monetary Policy Director General acts as the Secretary of the Committee. The monetary policy committee closely works with the Monetary Policy Department, Market Operations Department and Financial Supervision Department.

MPC responsibility:

Monetary Policy Committee is primarily responsible for setting the stance of monetary policy, which meets four times a year. MPC vigilantly monitors the developments in the economy of the country as well as in the international economic arena and set the targets for Reserve Money and Currency in Circulation and Net International Reserves.

MPC Tasks:

Monetary Policy Committee's main task is to execute the main tasks of Da Afghanistan Bank as per the law of Da Afghanistan Bank which are:

1. Formulation, adoption and execution of monetary policy;

2. Formulation of reserve policy and DAB's reserve position in accordance with DAB's Law;

3. Imposing regulations on execution of exchange rate policy and open market operations;

4. Decision making on keeping and management of DAB's reserves as determined in DAB's law;

5. Approval of regulations to facilitate e-transactions among DAB, banks and their customers;

6. Approval of regulations to regulate repo rates and interest rates;

7. Signing international clearing and payments agreements.

MPC Meetings:

MPC meetings are held on quarterly basis four times a year. The supreme council assigns a meeting on monetary policy issues during its quarterly meetings and its approvals are valid under the approvals of the Supreme Council. At the end of each MPC meeting, the Chairman holds a press conference to communicate the decisions made on recent monetary policy issues and macroeconomic situation as a whole.