Objective1.1
Inflation target
DetailsImplement monetary policy to stabilize inflation, as measured by the consumer price index, at around a 5 percent target over the medium term.
Draft
State Monetary Policy Guidelines for 2027
The draft Guidelines set out a total of 17 policy measures under two chapters: ensuring price stability and stability of the banking sector.
Chapters
2
Total measures
17
I · Price stability
7measures
II · Banking sector
10measures
Structure
2 chapters, 17 measures
IEnsuring price stability7 measures
IIEnsuring the stability of the banking sector10 measures
- 2.1Macroprudential policy framework→
- 2.2Big data and technology-based supervision→
- 2.3New payment technologies and innovation→
- 2.4Credit information and open banking→
- 2.5Financial literacy and online fraud prevention→
- 2.6Bank risk resilience and prudential ratios→
- 2.7Bank governance, foreign banks and resolution→
- 2.8Anti-money laundering (FATF)→
- 2.9Green loans and climate risk→
- 2.10Asset management and non-performing loans→
I
Chapter One
Ensuring price stability
7measures
Objective1.2
Central bank independence and governance reform
DetailsLaunch reforms that focus the central bank’s primary objective on price stability and bring its framework for institutional independence, governance, accountability, transparency and macroprudential decision-making in line with international best practice.
Objective1.3
Foreign exchange reserves and a flexible exchange rate
DetailsThe Bank of Mongolia implements policies to safeguard the adequacy and safety of international reserves while allowing the exchange rate to adjust flexibly in line with macroeconomic fundamentals. Gradually phase out the requirement for state-owned and partially state-owned mining companies to sell all export proceeds to the central bank and establish a mechanism for these earnings to be supplied to and traded in the domestic foreign exchange market in a transparent, open, and competitive manner.
Objective1.4
Excess liquidity management
DetailsThe Bank of Mongolia regularly assesses the level, composition, concentration, and dynamics of excess liquidity in the banking system, and manage it in a phased and efficient manner through the coordinated use of open market operations (central bank bills), the overnight deposit facility, reserve requirements, and other market-based instruments to strengthen the transmission of the policy rate.
Objective1.5
Gold purchases and ESG standards
DetailsThe central bank aligns its gold purchasing operations with internationally recognized Environmental, Social, and Governance (ESG) standards, while giving priority to gold sourced from responsible and traceable mining and production activities. It shall continuously monitor and assess the inflationary effects of excess liquidity arising from gold purchases and, where necessary, implement timely sterilization measures through its monetary policy instruments.
Objective1.6
MNT and foreign exchange market infrastructure
DetailsThe Bank of Mongolia develops the infrastructure of the domestic currency bond and foreign exchange markets and promotes the development of financial derivatives instruments.
Objective1.7
Transparency and expectations management
DetailsEnhance the transparency and effectiveness of central bank communication to strengthen public understanding of policy decisions and implementation, and to anchor inflation expectations.
II
Chapter Two
Ensuring the stability of the banking sector
10measures
Objective2.1
Macroprudential policy framework
DetailsAlign financial stability institutional framework with international best practices and introduce new macroprudential policy instruments.
Objective2.2
Big data and technology-based supervision
DetailsStrengthening the timeliness and effectiveness of decision-making by establishing an integrated big data governance framework and implementing an API-based real-time data ecosystem and deploying early warning system and technology-based supervision to identify and address risks proactively.
Objective2.3
New payment technologies and innovation
DetailsIntroduce new payment technologies, standards, and innovations in line with international best practices, advance research and pilot of Central Bank Digital Currency (CBDC), cross-border payment infrastructure, and information security, provide consumers with convenient, accessible, and reliable payment services.
Objective2.4
Credit information and open banking
DetailsEnhance the credit information system by developing a unified data exchange standard and an API-based Open Banking infrastructure, while strengthening the regulatory framework for fintech-based lending, consumer data protection, and accountability.
Objective2.5
Financial literacy and online fraud prevention
DetailsEnhance public financial literacy and bolster operational synergy among law enforcement agencies, commercial banks, non-bank financial institutions (NBFIs), and payment service providers (PSPs). This will be achieved through real-time information exchange to detect cyber-enabled financial fraud, execute temporary transaction holds, and deploy proactive containment measures to prevent asset exfiltration prior to fund recovery.
Objective2.6
Bank risk resilience and prudential ratios
DetailsTo protect the legal rights and interests of bank customers and depositors, continue measures to align the prudential ratios to banking operations with international supervisory standards, and to strengthen the banking system’s risk-absorption capacity, supervision and accountability.
Objective2.7
Bank governance, foreign banks and resolution
DetailsEnhance the legal and regulatory framework governing bank governance and the operations of foreign banks to strengthen competition within the banking sector; further improve the bank resolution framework; reinforce the legal and regulatory environment for the timely implementation of preventive, stabilization, and resolution measures in accordance with the law when banks experience financial distress; and undertake a Financial Sector Assessment Program (FSAP) conducted by international institutions.
Objective2.8
Anti-money laundering (FATF)
DetailsStrengthen the banking sector’s anti-money laundering, countering the financing of terrorism and countering proliferation financing (AML/CFT/CPF) framework in line with the technical compliance requirements of the FATF 40 Recommendations and the effectiveness requirements of the 11 Immediate Outcomes, and implement measures to ensure readiness for the upcoming FATF Mutual Evaluation.
Objective2.9
Green loans and climate risk
DetailsTo promote sustainable development, the Bank of Mongolia will implement policies to expand green lending, with the aim of increasing green loans to 10 percent of the total loan portfolio by 2030. In addition, the Bank of Mongolia will establish a climate-related financial risks database, develop methodologies to assess climate vulnerability and conduct stress tests, and strengthen banks’ capacity to identify, assess, and manage these risks.
Objective2.10
Asset management and non-performing loans
DetailsEstablish a national asset management framework and develop a secondary market that puts non-performing loans back into circulation in the economy.