Chapter I: Currency

 

Section 1: Unit of Currency and Par Value

Article 1:

The unit of currency shall be the Kuwaiti Dinar and shall be divided into one thousand Fils.

Article 2 *:

The basis for fixing the exchange rate for the Kuwaiti Dinar shall be specified by a decree after seeking the opinion of the Governor of the Central Bank.

* Text of Article (2) as amended under Decree Law No. (130) of the year 1977.

Article 3 *:

  1. Every transaction or agreement relating to money or involving the payment of money shall, in the absence of express agreement to the contrary, be deemed to have been made and agreed to be executed on the basis of the Kuwaiti Dinar.
  2. The Central Bank shall, whenever necessary and for all legal purposes it defines including the collection of duties, declare the exchange rates for the most important foreign currencies, either on the basis of the par value declared by the IMF or on any other basis which the Bank may decide.

* Text of paragraph (2) of Article (3) as amended under Decree Law No. (130) of the year 1977.

Section 2: Issue of Currency Notes and Coins

Article 4:

  1. The issue of currency shall be the exclusive privilege of the State. This privilege shall be exercised solely and exclusively by the Central Bank.
  2. No party other than the Central Bank may issue or circulate any notes or coins or any instrument or document payable to bearer on demand and which could be circulated as legal tender, for use as means of payment in place of the currency issued in accordance with the provisions of this Law.
  3. Any person who violates the provisions of this Article shall be subject to the penalties laid down in the Penal Code for forgery of currency notes or coins.

Article 5 *:

  1. The Central Bank may issue currency notes in the following denominations: One Dinar, Five Dinars and Ten Dinars, or in such higher denominations as may be specified by a decree issued upon a recommendation of the Minister or Finance and a proposal by the Board of Directors of the Bank.
  2. The above notes shall bear the signatures of the Minister of Finance and the Governor of the Central Bank.
  3. The currency notes referred to in this Article shall be legal tender in the State of Kuwait for the payment of any amount.

* Paragraph (1) of Article (5) as amended under Decree Law No. (130) of the year 1977.

Article 6:

  1. The Central Bank may issue currency notes of a value less than the currency unit, in Half Dinar and Quarter Dinar denominations.
  2. The above currency notes shall bear the signatures of the Minister of Finance and the Governor of the Central Bank.
  3. The currency notes referred to in this Article shall be legal tender in the State of Kuwait for the payment of amounts up to the following limits:
    1. twenty Kuwaiti Dinars for half-Dinar notes.
    2. ten Kuwaiti Dinars for quarter-Dinar notes.
  4. The Central Bank and the cashiers' offices of the State and banks operating in the State of Kuwait shall accept currency notes of small denominations without any quantitative limitations.

Article 7 *:

  1. The Central Bank may issue coins.
  2. Non-gold coins shall be legal tender in the State of Kuwait for the payment of any amount up to two Dinars, but the Central Bank shall accept them without any quantitative limitation.
  3. The Central Bank may specify the conditions for selling and buying gold coins by its cashiers' offices.
  4. The Central Bank may issue gold and non-gold commemorative coins, and the Bank shall determine the terms and conditions for the sale and purchase of such coins.
  5. Any person who refuses to accept the Kuwaiti currency provided for in this Article and in the preceding two Articles, as per their traded value and within their relative legal tender, shall be liable to the payment of a fine not exceeding one hundred Dinars.

* Paragraphs (4) and (5) of Article (7) have been added under Decree Law No. (130) of the year 1977.

Article 8:

The Council of Ministers shall decide the following on the recommendation of the Central Bank:

  1. The wording to be borne by currency notes to indicate their value, as well as the form, design and other characteristics of the notes.
  2. The denominations of coins to be issued by the Central Bank, their designs, forms, standard weights and permitted variations in weight, composition, and other specifications.

Section 3: Circulation and Withdrawal of Notes and Coins

First : Currency Notes

Article 9 *:

Various denominations of new currency notes shall be put into circulation by a decision of the Board of Directors of the Central Bank, setting out their descriptions and denominations. Such decision shall be published in the Official Gazette and announced to the public by various suitable means of publicity.

* Text of Article (9) as amended under Decree Law No. (130) of the year 1977.

Article 10 *:

  1. The Board of Directors of the Central Bank may, upon approval of the Minister of Finance, decide to withdraw any denomination of currency notes from circulation against payment of their face value. Such decision shall be published in the Official Gazette and announced to the public by various suitable means of publicity. The decision to withdraw shall fix the period for the exchange of withdrawn currency notes, provided that the period shall not be less than 90 days in normal circumstances and 15 days in cases of emergency. Upon the end of the exchange period specified in the decision of withdrawal, the withdrawn currency notes shall cease to be legal tender, but the bearer shall have the right to exchange them in the cashiers' offices of the Central Bank within ten years from the date of enforcement of the decision to withdraw. Currency notes which are not exchanged during this period shall be deducted from the currency in circulation, and their value shall be added to the account provided for in Article (48) of this Law.
  2. The Central Bank shall be under no obligation to refund the value of any lost or stolen currency notes, or to accept or pay for forged notes.
  3. The Central Bank shall pay the value of mutilated or imperfect currency notes in accordance with the instructions issued by the Bank. Currency notes which do not meet the requirements set out in these instructions shall be withdrawn from circulation without refund.
  4. The Central bank shall destroy the currency notes withdrawn from circulation in accordance with the instructions issued by the Bank in this connection.

* Pursuant to Decree Law No. (5) of the year 1991, the next paragraph has been added to item  (1) of Article (10) as follows:

"As an exception to the periods mentioned above in the previous item, the day of 30-9-1991 shall be fixed as the final and closing date for the obligations of the Central Bank of Kuwait to exchange the Currency Notes for which a decision is issued that they be withdrawn from circulation within a month from date of enforcement of this Law".

Second : Non-Gold Coins

Article 11 *:

  1. Various denominations of non-gold coins shall be put into circulation by a decision of the Board of Directors of the Central Bank setting out the descriptions of such coins. Such decision shall be published in the Official Gazette and announced to the public by various suitable means of publicity.
  2. Coins of any denomination may be withdrawn against payment of their face value. The decision to withdraw shall be taken by the Board of Directors of the Central Bank, published in the Official Gazette and announced to the public by various suitable means of publicity.
  3. The decision to withdraw shall specify the period for exchange which shall not be less than six months.
  4. Coins not presented for exchange within the above-mentioned period shall cease to be legal tender and their value shall be deducted from currency in circulation and added to the Special Account provided for in Article (48) of this Law.
  5. Coins which have been impaired, diminished, lightened or defaced by any cause other than fair wear and tear shall be withdrawn from circulation without refund.

* Paragraph (1) of Article (11) as amended under Decree Law No. (130) of the year 1977.

Section 4: Currency Cover

Article 12 *:

Currency in circulation and demand deposits held with the Central Bank shall have a cover consisting, at all times, of the following:

  1. Gold coins or bullion;
  2. Demand or time deposits in freely convertible currencies, placed with local banks or placed abroad with central banks, state treasuries, the Bank for International Settlements, the International Monetary Fund or with commercial banks;
  3. Foreign securities, instruments, bills or certificates issued or guaranteed by foreign governments or by international financial or monetary institutions, provided that they are expressed in freely convertible currencies and easily negotiable in financial markets;
  4. Foreign securities or bonds other than those issued or guaranteed by foreign governments or by international financial or monetary institutions, provided that they are expressed in freely convertible currencies and easily negotiable in financial markets;
  5. Commercial papers expressed in freely convertible foreign currencies and acceptable to foreign commercial banks;
  6. Treasury bills and bonds issued or guaranteed by the Government of Kuwait, and advances granted by the Central Bank to the Treasury of the Government of Kuwait;
  7. Domestic commercial papers discounted in the Central Bank and loans and advances granted to local banks against adequate guarantees.

* Text of Article (12) as amended under Decree Law No. (130) of the year 1977.