The Central Bank of Mongolia shall be the competent organization authorized to implement State monetary policy within the territory of Mongolia. The Central Bank of Mongolia shall be called the Bank of Mongolia (Mongolbank) and the main objective is to ensure the stability of the national currency – Togrog. The Bank of Mongolia is a legal entity established by the State and shall use the seal, stamp, and official form. Within its main objective the Bank of Mongolia shall also promote 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 the law of Mongolia on central bank, the Bank of Mongolia shall conduct the following activities:

ISSUING CURRENCIES INTO TRANSACTION

1. The Bank of Mongolia shall have the exclusive right to ensure proper structure of the currency in circulation through issuing and withdrawing the Mongolian currency.
2. The Bank of Mongolia shall manage the production, transportation, safekeeping, verification, as well as the disposal and reimbursement of the Mongolian currency.
3. The Bank of Mongolia shall approve the procedures on reimbursement and disposal of the Mongolian currency. It is prohibited to destroy the currency without the BOM authorization.

/ Article 9 - The Law of Mongolia on Central Bank /

FORMULATION AND IMPLEMENTATION OF MONETARY POLICY BY COORDINATING MONEY SUPPLY IN THE ECONOMY

1. The Bank of Mongolia shall formulate and implement State monetary policy.
2. The Bank of Mongolia shall formulate State monetary policy for the next year, and present that policy to the State Ikh Khural by October 1 of each year. The policy shall contain:
   • an assessment of and conclusions on the monetary supply and financial markets of the economy, including factors and reasons for the assessment and conclusions;
   • target range for monetary indicators, domestic price level and exchange rate of the togrog in terms of stable foreign currencies and the application of monetary policy instruments."

/ Article 10 - The Law of Mongolia on Central Bank /

ACTING AS THE GOVERNMENT’S FISCAL INTERMEDIARY

When acting as the Government’s fiscal intermediary the Bank of Mongolia may conduct the following operations:

1. holding the Government’s unified budget account and conducting banking transactions at the request of the Minister of Finance in accordance with an agreement containing the relevant terms;
2. hold auction on the bond and securities issued by the Government to other entities and purchasing such bonds and securities in accordance with State monetary policy objective and current market conditions;
3. conducting payment transactions with respect to Government loans from foreign countries and loans by others to legal persons which the Government has guaranteed, within the amount of the balance remaining in the State budget unified account, in accordance with the schedule of payments for such loans;
4. other intermediary activities in accordance with legislation.

/ Article 17 - The Law of Mongolia on Central Bank /

SUPERVISION THE BANKING ACTIVITIES

1. For the purpose of protecting the interests of depositors and customers, and strengthen the reliability of the banking system, the Bank of Mongolia shall establish procedures and instructions on decision making, undertake supervision and enforcement activities relating to: the licensing of banks, ensuring the banks own capital and solvency, and other regulation of banking activities.
2. The relevant laws will be followed on the activities of establishment, authorization, invalidation, restrictions, as well as providing requirements, conducting inspection, and taking compulsory actions for the banks.

/ Article 19 - The Law of Mongolia on Central Bank /

Currently there are 12 commercial banks are operational in Mongolia, and they are:

•   Trade and Development Bank
•   Golomt Bank
•   Xacbank
•   Khan Bank
•   State Bank
•   Capitron Bank
•   National Investment Bank of Mongolia
•   Chinggis Khaan Bank
•   Arig Bank
•   TransBank
•   Bogd Bank
•   M bank

ORGANIZATION OF INTER-BANK PAYMENTS AND SETTLEMENTS

1. The Bank of Mongolia may arrange the clearing and settlement of interbank payments and shall make payments through each bank’s current account with the Bank of Mongolia.
2. The Bank of Mongolia may open branches for interbank payment and settlements.
3. The Bank of Mongolia shall determine the procedure for interbank payment and settlement.

/ Article 20 - The Law of Mongolia on Central Bank /

HOLDING AND MANAGEMENT OF THE STATE’S RESERVES OF FOREIGN CURRENCIES

• The Bank of Mongolia shall be responsible for ensuring the liquidity and reliability of the foreign exchange reserves of the country's foreign reserves. Only after these obligations are fulfilled may the Bank of Mongolia conduct income earning operations using the foreign currency reserves of the State to invest in instruments tradable in the financial markets.
• Foreign currency reserves of the State held by the Bank of Mongolia shall consist of the following assets:
  • monetary gold held in foreign banks and with financial institutions;
  • cash or non-cash convertible foreign currencies;
  • bills of exchange and promissory notes, freely payable in convertible foreign currencies;
  • any type of obligatory securities issued or guaranteed by the Government or central bank of foreign countries or international financial institutions which is denominated and is to be paid in convertible foreign currencies;
  • other assets internationally recognized as foreign currency reserve.
• When managing foreign currency reserves of the State the Bank of Mongolia may conduct operations to freely convert, purchase and sell the assets set out in paragraph 2 of this article.
• The Bank of Mongolia shall ensure the stability of the togrog when it purchases or sells foreign currencies and similar assets in exchange for the togrog.
• If foreign currency reserves of the State have declined below the level determined by the State Ikh Khural or if the Bank of Mongolia has established that it has become impossible to implement foreign currency policy and to promptly execute foreign payments of the State, the Bank of Mongolia shall officially inform the Government and shall take pertinent measures jointly with the Government.

/ Article 21 - The Law of Mongolia on Central Bank /

Currently Bank of Mongolia is implementing the state monetary policy and supervising the activities of commercial banks, with a structure of (Governor, First deputy governor, and deputy governor) 10 departments, 1 center, 14 divisions, 3 independent units, one settlement center, 5 regional divisions, and 12 branches.