In the event that public finances keep deteriorating, a country can experience ‘fiscal dominance’ – when the central bank’s interest rate policy is primarily dictated by the need to ensure adequate financing of the budget deficit at the expense of other, real, economic considerations. It is easy to see how this can be a suboptimal outcome from the point of view of economic development.
The guidelines have covered the operationalization of the AML Act, Suspicious Transactions Reporting, and measures to be adopted by financial institutions to combat the financing of terrorism. The Central Bank has also revised the Forex Bureau Guidelines so as to align them with the AML Act and is currently sharing with stakeholders the Hawala guidelines.