Mongolia’s banking system is relatively young and untested, and, therefore, the Central Bank of Mongolia is facing a range of challenges. One such example is the rapid drop in the tugrik, which lost approximately 20% of its value over the past year, placing pressure on the banking system but also reducing the price of exports. Currently, there are no limitations placed on foreign ownership of banks, nor are there capital controls, and two banks are 100%-owned by foreign companies. The key to the future for the Mongolian banking sector is good corporate governance and sound supervision, while the challenge for the central bank will be to return to a traditional role, draining liquidity from the system, and easing back on policies without compromising the system’s strength. Developing financing for smaller companies will also be key to ensuring Mongolia’s long-term economic growth.
This chapter contains interviews with Randolph Koppa, President, Trade and Development Bank; and Ayumi Konishi, Director-General, East Asia Regional Department, Asian Development Bank.