Limitations of State Bank of Pakistan?

[sjahanzebh]

I hope I'm asking this in the right section. Does anyone know the limitations SBP has?
And how does the government intervention limit its functions?
Any help would be much appreciated in this regard.
Thank you.

 

[RiazHaq]

State Bank of Pakistan determines monetary policy (interest rates, money supply, etc.) but it has no control over fiscal policy (budget process, fiscal deficits, tax collection, etc). It also regulates country's banks.

It's very difficult to manage the national economy when monetary and fiscal policies are not well coordinated, as is the case in Pakistan.

Nonetheless, State Bank should get credit for the fact that, unlike many other countries of the world, Pakistan has never defaulted on its obligations, nor has it had even a single year of recession since its creation in 1947.

Pakistan's commercial banking sector, and more recently micro finance and branchless banking, have done very well under the guidance of SBP.

Haq's Musings: Financial Services Sector in Pakistan

 

[sjahanzebh]

Thankyou for replying, much appreciated

 

[ajpirzada]

i think, from wat i remember from the whole debate two years back, that the SBP is semi autonomous. autonomous in a way that they cant conduct monetary policy in a way they like eg. interest rate decisions, banking regulations, etc etc. also they run their institution as they like without any government intervention except that there is government representation on their board (but its not in majority). its semi-autonomous because government can make them lend money to the itself as it deems fit. Full autonomy requires that it is Central Banks decision to lend the money to the government of not. But this is not so in the case of SBP.
and personally i like the semi-autonomous framework. Full autonomy in a democratic setup is not democratic. and given that its the government which is held accountable by the people, it should therefore have some leverage over the SBP and consequently the conduct of monetary policy.

 

[somebozo]

State Bank of Pakistan determines monetary policy (interest rates, money supply, etc.) but it has no control over fiscal policy (budget process, fiscal deficits, tax collection, etc). It also regulates country's banks.

It's very difficult to manage the national economy when monetary and fiscal policies are not well coordinated, as is the case in Pakistan.

Nonetheless, State Bank should get credit for the fact that, unlike many other countries of the world, Pakistan has never defaulted on its obligations, nor has it had even a single year of recession since its creation in 1947.

Pakistan's commercial banking sector, and more recently micro finance and branchless banking, have done very well under the guidance of SBP.

Haq's Musings: Financial Services Sector in Pakistan

This is precisely what is called debt slavery. Same thing took Germany six feet deep now Greece and Cyprus too. Capital is used to service the people but with debt banking people are made to serve the capital. What SBP effectively is a vault for storing forex reserves and printing currency bills - colonial legacy left over.