The
Bank of Mongolia, or Mongolbank,
is the central bank of Mongolia
. The
main objective of the Bank of Mongolia is to ensure stability of
the
Mongolian tögrög.
Within its main objective the Bank of Mongolia promotes balanced
and sustained development of the national
economy, through maintaining the stability of money,
financial markets and the banking system.
In order to implement its objectives as set forth in this law, the
Bank of Mongolia shall conduct the following activities:
- Issuing currencies into circulation;
- Formulation and implementation of monetary policy by
coordinating money supply in the economy;
- Acting as the Government's fiscal intermediary;
- Supervision of banking activities;
- Organization of inter-bank payments and settlement;
- Holding and management of the State's reserves of foreign
currencies.
History
A joint
Mongolian-Russian bank, called the "Trade and Industry Bank of
Mongolia" (Bank of Mongolia) was opened on June
2 1924 in Altanbulag
with a single branch.
At that time, the bank's capital was 260000
yanchaan (the currency of the period). It operated
with 22 employees, 18 of which were Russian specialists and 4 of
them were Mongolian. At the start, the joint bank was called by two
names, "Trade and Industry Bank of Mongolia", and the "Bank of
Mongolia", but it was named the Bank of Mongolia in official papers
and documents.
Due to the absence of a national currency, the bank faced
difficulties in fulfilling financial and monetary-credit policy in
the first 18 months, and foreign currencies were used in
circulation.
Consequently, according to the decision of
Ikh Khural, the
Government of Mongolia issued a
resolution to conduct
monetary
reform on
February 22 1925. In accordance with this resolution, the Bank of
Mongolia issued a new national currency, the Tögrög, comprising of
25% for precious metal and foreign stable currency, and 75% for
marketable goods.
In 1954, the makeup of the Bank staff had increased to 98% (compare
to 18% in 1924).
On the basis of this extension, the former
Soviet
Union
transferred its own share of capital and stocks in
the Bank of Mongolia to the state of Mongolia. Following
this, the Bank of Mongolia was renamed as the State Bank of
Mongolia.
In 1991, a completely new 2 level banking system was established in
Mongolia. Since its establishment, the Bank of Mongolia has been
influencing and contributing efforts on the economy of the country,
in maintaining the monetary policy aimed at the stabilisation of
the value of the currency, and reduction of the
inflation rate in the unstable transitional
period.
Ongoing activities
Bank of Mongolia increased minimum
capital requirement for banks
periodically, and capital adequacy ratio of the banking sector was
as high as 14-24 percent since 2000, which is 1.8-3 times higher
than international minimum standards. With strong economic growth,
private sector credit has increased significantly. Banks’ total
outstanding
loans were
MNT60
billion which were issued to 1700 borrowers in 2000, compared to
total outstanding loans of MNT 2,000 billion issued to 483 thousand
borrowers in September, 2007. Ratio of non-performing loans fell to
3.5 per cent in September 2007, down from 30 per cent in
2000.
Financial sector is fully privatized, and now 16 banks,141
non-bank financial
institutions and 131
savings and credit
cooperatives are operating in Mongolia.
Profitability of banks was high compared
to most advanced countries, which have
return on assets ratio of 2.7 per cent in
2007. And three
commercial banks
such as
Khan Bank,
Xac
bank and
Trade and Development
Bank of Mongolia are also rated by the agencies on its
products, assets and activities. They are on its way to issue
securities to foreign market.
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