The Central Bank Of Jamaica

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The two financial institutions that will be compared and contrast are the European Central (ECB), and the central bank of Jamaica, the Bank of Jamaica (BOJ). Being a native of Jamaica, I will start off with some background information on the BOJ. The Bank of Jamaica, established by the Bank of Jamaica Law (1960), began operations in May 1961. The establishment of the Central Bank was in recognition of the need for an appropriately regulated financial structure to encourage the development process, particularly as Jamaica was about to embark on the road to political independence. The main objectives of the Central Bank were defined by the Bank of Jamaica Act to be:
• To issue and redeem notes and coins.
• To keep and administer the …show more content…

This is because it is the best contribution monetary policy can make to economic growth and job creation. The European Central Bank is responsible for the prudential supervision of credit institutions located in the euro area and participating non-euro area Member States, within the Single Supervisory Mechanism, which also comprises the national competent authorities. It thereby contributes to the safety and soundness of the banking system and the stability of the financial system within the EU and each participating Member State (European Central Bank). The Euro-system consists of the following set of instruments:
• Open market operations,
• Standing facilities,
• Minimum reserve requirements for credit institutions. Our focus is on the Open market operations and the minimum reserve requirements for credit institutions. Currently, the Bank of Jamaica uses the following monetary policy tools:
• Indirect Policy Tools: Open market operations
• Direct Policy Tools: Reserve requirements Open market operations play an important role in steering interest rates, managing the liquidity situation in the market and signaling the monetary policy stance. Open market operations are initiated by the ECB, which decides on the instrument and the terms and conditions. It is possible to execute open market operations on the basis of standard tenders, quick tenders or bilateral procedures. Open market operations can differ in terms of aim,

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