On 13 September 2011, the Banking and Payments Authority of Timor-Leste ("BPA") was transformed into the Central Bank of Timor-Leste under Parliamentary Law No 5/2011 ("Organic Law of the Central Bank").  The establishment of the Central Bank, which has broader powers than its predecessor the BPA, further demonstrates that the State of Timor-Leste (East Timor) is progressively putting in place its financial and economic architecture.

The new Central Bank, which is an independent and autonomous public entity, is managed by the Governor, who is supported by two Deputy Governors, and a Board of Directors comprised of the Governor, the two Deputy Governors and four non-executive members.  The Governor of the Central Bank is currently Abraão de Vasconselos.

Under the Organic Law of the Central Bank, the Central Bank's primary objective is to achieve and maintain domestic price stability.  In addition, the Central Bank will also promote and maintain a stable and competitive financial system based on free market principles and support the general economic policies of the Government of Timor-Leste.

To achieve its objectives, the Central Bank has, amongst others, responsibility for the following functions:

  • To define and implement monetary policy;
  • To define and adopt the exchange rate system;
  • To conduct foreign exchange operations;
  • To hold and manage official foreign reserves;
  • To hold and manage the State's reserves of gold;
  • To issue and manage the currency of Timor-Leste;
  • To establish, promote and oversee sound and efficient payment and securities settlement systems;
  • To regulate, license and supervise financial institutions such as banks, non bank deposit taking institutions (eg micro- financiers), insurance companies, insurance intermediaries and currency exchange bureaus; and
  • To act as the fiscal agent of the State.

The Central Bank is also the operational manager of Timor-Leste's sovereign wealth fund- known as the Petroleum Fund- in accordance with the operational agreement it signed with the Government of Timor- Leste on 25 June 2009.  As at 31 October 2011 the Petroleum Fund had assets of just over US$9 billion.

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