- The central bank of Egypt operates according to the provisions of law no 88 of year 2003 promulgating the law of "The Central bank, the banking sector and money" with the objective of ensuring the safety and soundness of the banking system and undertaking any tasks or taking any measures required for applying the monetary, credit and banking policies, as well as for guaranteeing the soundness of bank credit.
- The central bank takes the means with which it ensures the realization of its objectives and the discharge of its functions. This includes supervising the units of the banking sector, setting the regulatory and supervisory standards to guarantee the sound financial positions of banks, and their efficient performance; as well as issuing the necessary decisions for their implementation, and evaluating the efforts exerted regarding guaranteeing the soundness of bank credit and ensuring the application of standards of credit quality and financial soundness with due regard to international banking norms.
- Furthermore, article (56) of the same law states that the board of directors of the Central Bank sets rules for the regulation and supervision over banks, and the regulations relevant to their activities, with due regard to international banking norms, providing they shall comprise the following:
- A determination of the minimum capital adequacy requirement
- The maximum limits of concentration of bank's investments abroad
- The maximum limits of the debt due abroad and the guarantees provided for a finance payable abroad.
- The maximum limits of the lending value of the collateral / guarantees provided against finance and credit facilities, and the determination of maturities.
- Determination of the liquidity and reserve ratios.
- The maximum limits of the bank's investments in securities ,in real estate finance, and in the credit for consumer purposes.
- The regulations for opening accounts, and for conducting banking transactions.
- The standards followed in determining the value of each type of the bank's assets.
- The rules of disclosure, and the data to be disseminated , as well as the means of dissemination.
- The rules concerning the maximum limit of the bonds each bank may issue or guarantee, and the conditions of bonds issuing or guaranteeing.
- The maximum limits of exposure to one customer and his connected parties as well as the parties related to the bank.
- The banking supervision sector is responsible for implementing the central bank's supervisory objectives and principals, in order to ensure the stability, integrity, soundness and efficiency in the banking system.
- The aim of the CBE's supervisory process is to sustain an attentive outlook and develop an early warning system. This allows the CBE to take proactive approaches to ensure (i) the safety and soundness of the banking system, (ii) that banks comply with the CBE's law and supervisory regulations; (iii) that banks develop risk management systems and enhance the internal control practices. This should automatically result in a well managed banking sector and accordingly achieves the ultimate goal of protecting the rights of depositors and ensuring a positive contribution to the development of the national economy.
- The banking supervision sector is composed of the following units:
- Macro prudential
- Regulations unit
- Central credit registry and legal cases
- Basel II implementation
- The level of co-ordination among banking supervision units has been enhanced significantly, which plays an instrumental role in reaching banking supervision objectives. Besides, it increases the capability of the employees to resolve any impediments and efficiently accomplish tasks due to the strong interaction and mutual understanding among them.