The legislative framework comprises three principal pieces of legislation which provide the legal and policy parameters for the exercise of the statutory powers of the Bank of Guyana.  

The Bank of Guyana Act 1998 

The Bank of Guyana Act No.19 of 1998 established the Central Bank as an autonomous institution governed by the Act. The principal objective of the Bank is stated as follows: 

“Within the context of the economic policy of the Government, the Bank shall be guided in all its actions by the objective of fostering domestic price stability through the promotion of stable credit and exchange conditions, as well as sound financial intermediation conducive to the growth of  the economy of Guyana.” 

The Act which includes inter alia, provisions for the administration of the Bank, also gives the Bank exclusive responsibility for supervision and regulation of licensed financial institutions and tasks the Bank with the responsibility of overseeing the payment system.  

The Act makes provision for a Board of Directors as the policy making organ of the Bank. The Governor and Deputy Governor serve as Chairman and Deputy Chairman of the board respectively which should consist of  not less than four and not more than six other members. 

In November 2004 the Act  (Part IV Administration) was amended with a view to enhancing and safeguarding the autonomy of the Bank . 

Section 9 of the Act was amended by: 

a)      increasing the number of Directors

b)      the inclusion of the requirement that the offices of Governor and  Deputy Governor be filled within a specified period of becoming vacant

c)      the requirement of the specification of the contractual terms and conditions of appointment of the Governor, Deputy Governor and Banking Manager upon appointment.   

There were also amendments to sections 10,12,14 and 15 of the Act. 

The Financial Institutions Act 1995 

The Financial Institutions Act No.1 of 1995 which came into operation on the 29^th May, 1995 created the regulatory framework for the regulation of the business of banking and other financial business in Guyana. 

The Act comprises nine parts and specifies requirements for licensing of financial institutions, paid up capital, restrictions on banking and financial activities, supervision of licensed financial institutions and provisions for insolvency and winding up. 

The Financial Institutions Act remained substantially unchanged since its enactment in 1995 until November 2004 when amendments were made to the Act by way of modification of some sections and the inclusion of new emergency provisions dealing with temporary control. 

Prior to the amendments in 2004, section 9 of the Act was amended in May 1996, to prohibit a deposit taking financial institution from acquiring another such licensed financial institution and also to prevent a person from acquiring shares directly or indirectly through related persons in one or more licensed financial institutions incorporated in Guyana and which accepts deposits, in excess of twenty percent of the total paid-up capital of all such licensed financial institutions, except for the purpose of participating in the capital expansion of the licensed financial institution in which the person has acquired control. 

The Act was amended in 2004 to prevent abuse of financial institutions by insiders, enhance corporate governance and strengthen the powers of the Central Bank to deal with problematic licensed financial institutions. 

Section 14 was amended to prohibit the granting of loans by a licensed financial institution for the purpose of purchasing shares in the said licensed financial institution or its related companies unless either deposits with the financial institution, or obligations of the Government of Guyana  is offered as collateral.  

Section 29 was amended to prevent insiders from colluding with others to obtain credit facilities by fraudulent means. 

Section 30 was amended to strengthen corporate governance by making all officers concerned with the management of the financial institution responsible for taking all reasonable steps to secure compliance by the financial institution with the requirements of the Act and directions of the Bank and attaching liability for failure to do so. 

The Act was also amended by the inclusion of six new sections to improve the Bank of Guyana’s ability to deal with problematic licensed financial institutions, particularly in relation to the conduct of unsafe or unsound practices which would pose a threat of loss or actual loss to depositors and or shareholders. 

The provisions of the Act are supported by subsidiary legislation, notices and  supervision guidelines.

Dealers in Foreign Currency Licensing Act 1998

The Central Bank is also responsible for the licensing and supervision of cambios, which are institutions licensed to buy and sell foreign currencies.
Regulation is conducted in accordance with the Dealers in Foreign Currency Licensing Act 1989. This Act gave the Minister the power to grant licenses, renewable on a yearly basis. In 1995 the Act was amended granting the Bank of Guyana in consultation with the Minister full responsibility for administering the Act.

Implementing regulations have also been passed under this Act.