RegAlertRule · CBJ · 19 Apr 2017
Central Bank of Jordan Memorandum No. 166/87 Regarding the Issuance of Foreign Currency Bank Guarantees
The Central Bank of Jordan prohibits licensed banks and financial companies from opening permanent credits or issuing foreign currency bank guarantees for transactions between residents within the Kingdom. This prohibition is based on the finding that such practices unjustifiably inflate foreign currency liabilities, violating Article 26(a) of the Central Bank Law. Foreign currency is designated exclusively for payments between residents and non-residents, while local credits and guarantees must use foreign currency only as a accounting unit to determine the amount owed in Jordanian Dinars.
Form 12/05/14
In the Name of Allah, the Most Gracious, the Most Merciful
Central Bank of Jordan
CENTRAL BANK OF JORDAN
Number / 704-30905
Date 16 Muharram 1408 AH
Corresponding to 9 September 1987 AD
Memorandum to Licensed Banks and Financial Companies ( No. 166/87 )
It has been observed recently that some licensed banks and financial companies are opening permanent credits or issuing foreign currency bank guarantees based on requests from residents for the benefit of other residents within the Kingdom.
Since this leads to the inflation of the foreign currency liabilities of licensed banks and financial companies without justification, which is contrary to the provisions of paragraph (a) of Article (26) of the Central Bank Law, you are requested to cease issuing such credits, without this preventing the consideration of foreign currency as merely an accounting unit to determine the amount committed in Jordanian Dinars in local credits and guarantees, noting that types of foreign currency are issued to cover payments between residents and non-residents only.
(Governor)
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