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MONGOLIA’S BANKING REGULATION EVOLUTION: A JOURNEY OF TRANSFORMATION
Ulaanbaatar, Mongolia - The Bank of Mongolia: A Journey of Transformation
The Bank of Mongolia, formerly known as the Trade and Industry Bank of Mongolia, has undergone a remarkable transformation since its establishment in 1924. From its humble beginnings as a joint venture between Mongolian and former Soviet Union entities to its current status as a key player in the country’s financial sector, the bank has navigated significant milestones and regulatory changes.
Early Years (1924-1950s)
In the early years, the Bank of Mongolia focused on:
- Circulating the national currency, Togrog
- Financing trade activities
- Regulating supply and prices of products
The bank’s staff composition was initially dominated by former Soviet officers, with Mongolian officers making up only 20% of the workforce.
Expansion and Growth (1950s-1990s)
The 1950s saw a significant expansion in the bank’s structure, with:
- Local branches established
- National staff trained with the assistance of former Soviet officers
By 1954, the former Soviet Union transferred its shares to the State of Mongolia, renaming the bank as the State Bank of Mongolia.
Over the next three decades, the bank was led by governors such as G. Baljid, L. Lkhamsuren, and P. Tumur, who oversaw the growth of the banking sector and the development of a two-level banking system in 1991. This period also saw the establishment of 31 commercial banks, which later reduced to 17 due to defaults, mergers, and liquidations.
Reforms and Stability (1990s-2012)
The 1990s were marked by significant reforms, including:
- Introduction of the Banking Charter Act
- Law on Banking
- Establishment of a two-level banking system
The bank’s governors during this period, N.Jargalsaikhan, D.Molomjamts, J.Unenbat, O.Chuluunbat, A.Batsukh, and L.Purevdorj, focused on:
- Maintaining sector stability
- Monitoring money supply
- Decreasing inflation rates
Recent Developments (2012-Present)
Since 2012, Governor N.Zoljargal has led the Bank of Mongolia, overseeing a banking sector with:
- 14 commercial banks
- 1386 branches operating across the country
- Over 13,564 staff providing services to business entities, organizations, and individuals
The bank has been at the forefront of regulatory changes, implementing key reforms such as:
- Introduction of the Togrog national currency in 1925
- First silver coin in circulation in 1926
- Multi-party payment system in 1963
- Laws on anti-money laundering, credit guarantees, and deposit insurance
Conclusion
As Mongolia continues to navigate its economic development path, the Bank of Mongolia remains a vital institution, playing a crucial role in regulating the country’s banking sector and promoting financial stability.