ADEQUACY OF EXCHANGE CONTROL ACT IN SAFEGUARDING THE OPERATIONAL INDEPENDENCE OF THE RESERVE BANK OF MALAWI

Abstract

It is the dream of very Malawian to see that the Regulatory institution such as Reserve Bank of Malawi is not being politicized. However, inadequacy and gaps in the legal frame work that govern the operation of the bank can affect the realization of this dream. The Malawians may not realize this dream if the legislation in question does not adequately provide safeguards to operational independence of the Reserve Bank of Malawi. The Reserve Bank of Malawi just like any other central banks can be said is independent if its legal framework meets the legal indicators of central bank independence and does not breach constitutional standards that enhances the operational independence of the Reserve Banks of Malawi. Unfortunately, in most democratic society, where the people who are elected into political office has powers to enact laws, they always find ways to enact a piece of legislation that gives them advantage. This problem is commonly known as political interference. This and other problems lead to the bank lose its independence and its control of foreign exchange. As a result, this in the end lead to the loss of forex as a nation. That in recent years we have witnessed the unscrupulous individuals sending forex abroad. Some have been even arrested at the airport when they attempted to externalize forex. This study, therefore, explores the adequacy of the Exchange control Act in safeguarding the operational independence of the Reserve Bank of Malawi. The study examines whether and how the Exchange Control Act do adequately safeguards the operational independence of the Reserve Bank of Malawi. To do this, the study applies legal indicators of central bank independence as well as constitutional standards that that enhance the operational independence of the Reserve Bank of Malawi.