42. Control of foreign exchange holdings of commercial banks

The Governing Board may determine the manner of determination of the maximum amount of the working balances which licensed commercial banks may hold in foreign currencies generally or in any specified foreign currency or currencies, and may require such banks to sell to the Central Bank all or any specified part of the surpluses in excess of such maximum amount.

The Governing Board may, having regard to the special needs of any particular licensed commercial bank, permit such bank to hold working balances in any specified foreign currency in excess of the maximum amount determined for such currency under subsection (1).

In ascertaining whether the working balances of any licensed commercial bank in any foreign currency are in excess of the maximum amount determined under subsection (1), there may be deducted from such balances the net liabilities of that bank in currencies into which the first-mentioned currency is freely convertible.