Bank of Mongolia
Encyclopedia
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:
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, consisting 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.
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 loan
s were MNT 60 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 institution
s 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.
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
of Mongolia
Mongolia
Mongolia is a landlocked country in East and Central Asia. It is bordered by Russia to the north and China to the south, east and west. Although Mongolia does not share a border with Kazakhstan, its western-most point is only from Kazakhstan's eastern tip. Ulan Bator, the capital and largest...
. 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
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
, 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 AltanbulagAltanbulag, Töv
Altanbulag is a sum of Töv Province in Mongolia....
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
Monetary reform
Monetary reform describes any movement or theory that proposes a different system of supplying money and financing the economy from the current system.Monetary reformers may advocate any of the following, among other proposals:...
on February 22, 1925. In accordance with this resolution, the Bank of Mongolia issued a new national currency, the Tögrög, consisting 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
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
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
Inflation rate
In economics, the inflation rate is a measure of inflation, the rate of increase of a price index . It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal.The inflation rate is used to calculate the real interest...
in the unstable transitional period.
Ongoing activities
Bank of Mongolia increased minimum capital requirementCapital requirement
Capital requirement refers to -The standardized requirements in place for banks and other depository institutions, which determines how much capital is required to be held for a certain level of assets through regulatory agencies such as the Bank for International Settlements, Federal Deposit...
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 loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s were MNT 60 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 institution
Non-bank financial institution
A non-bank financial institution is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market...
s and 131 savings and credit cooperatives are operating in Mongolia. Profitability
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
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
Khan Bank
-Ownership and Governance:In 2003 Khan Bank was privatized through international tender. Sawada Holdings of Japan is the largest shareholder with a 52.9% interest. Other investors include the Tavan Bogd Group of Mongolia, Development Alternatives, Inc...
, Xac bank and Trade and Development Bank of Mongolia
Trade and Development Bank of Mongolia
Trade and Development Bank is a commercial bank located in Ulaanbaatar, Mongolia. It is the oldest and one of the largest banks in Mongolia and was founded on 1990. TDB announced a partnership to form "Bloomberg TV Mongolia" that would be headquarted in Mongolia....
are also rated by the agencies on its products, assets and activities. They are on its way to issue securities to foreign market.
External links
- Mongolbank official website
- Khan Bank - Mongolian largest commercial bank website
- Trade and Development Bank - Mongolian commercial bank website
- Golomt Bank - Mongolian commercial bank website
- The State Bank - Mongolian commercial bank website
- Xac Bank - Mongolian commercial bank website
- Capitron Bank - Mongolian commercial bank website
- UB City Bank - Mongolian commercial bank website
- Zoos Bank - Mongolian commercial bank website
- Savings Bank - Mongolian commercial bank website
- Erel Bank - Mongolian commercial bank website
- National Investment bank - Mongolian commercial bank website
- Mongol Post Bank - Mongolian commercial bank website
- Capital Bank - Mongolian commercial bank website
- Transport Bank - Mongolian commercial bank website
- Chingis Khan Bank - Mongolian commercial bank website
- Credit Bank - Mongolian commercial bank website
- Anod Bank - Mongolian commercial bank website