Monetary Policy Instrument

To implement monetary policy, Da Afghanistan Bank (DAB) employs a range of instruments such as foreign exchange auctions and required reserves of commercial banks. Foreign exchange auctions are a sub-instrument of open market operations, conducted through a transparent and competitive bidding process involving commercial banks, licensed Foreign Exchange Dealers (FXDs), and Money Service Providers (MSPs). Required reserves refer to the percentage of commercial banks' deposits that must be held with DAB. These reserves are currently determined based on the classification of commercial banks.