Director General of the department P. Munkhbayar
The Financial Markets Department is responsible for implementing monetary policy, conducting financial market operations, holding and managing the foreign exchange reserves, acting as the Government’s financial intermediary, and conducting the financial agreements of the Central bank.
Functions of the Domestic Market Operations Division
The Domestic Market Operations Division is responsible for ensuring the implementation of the Bank of Mongolia’s monetary policy, organizing financial market operations, formulating relevant regulations and procedures, and monitoring compliance. Through these activities, the department aims to improve the effectiveness of monetary policy and contribute to the stability of the financial market.
1. To implement monetary policy, Domestic Market Operations Division shall operate the following financial market operations:
- Organize and execute primary auctions of government bonds and central bank bills;
- Organize the central bank’s repo operations;
- Execute standing facilities and intraday lending operations;
- Conduct foreign exchange spot trading in the domestic market;
- Organize trading of financial derivatives;
- Execute foreign currency deposit transactions;
- To calculate and monitor required reserve ratio of banks and ensure compliance.
2. Policy, Strategy, and Market Development
- Develop proposals to improve financial market infrastructure to enhance the effective implementation of monetary policy,
- Ensure the appropriate use of monetary policy instruments, further develop and strengthen such instruments, and explore and introduce new financial market instruments;
- Develop proposals for managing excessive exchange rate volatility and implement measures in line with the Bank of Mongolia’s management directives;
- Develop proposals containing decisions on the regulation of monetary policy instrument;
- Prepare liquidity forecasting on a regular basis
3. Other Functions
- Conduct lending operations as lender of last resort, including lending to the Government, providing loans to banks, and on-lending activities, and monitor repayment;
- Manage the Savings Fund in accordance with relevant laws and approved mandates, and prepare and submit relevant reports and information to management and competent state authorities.
Functions of the Reserve Management Division
The Foreign Exchange Reserve Management Division is responsible for managing the Bank of Mongolia’s foreign exchange reserves in accordance with internationally accepted reserve management principles, while maintaining an appropriate balance of liquidity, safety, and return.
1. Formulate reserve management strategies and policies
- Develop and implement tactical investment strategies for the management of foreign exchange reserves, in line with approved risk levels, limits, and portfolio structure;
- Manage the assets of the Future Heritage Fund in accordance with the relevant agreements;
- Introduce best international practices and governance standards into investment decision-making.
- Maintain an appropriate level of liquidity in the reserves to ensure the fulfillment of external payment obligations.
2. External cooperation, market research and analysis
- Expand relations and cooperation with foreign central banks, international financial institutions, and commercial banks;
- Establish relationships with new counterparties and strengthen the depth of cooperation.
- Conduct regular analysis of international financial and commodity markets, as well as macroeconomic conditions;
- Identify factors influencing the return and risk profile of foreign exchange reserves and regularly report them to management;
- Undertake research on potential new financial products and services and prepare proposals for their implementation.
3. Other functions
- Implement internal controls in compliance with relevant laws, regulations, and international best practices;
- Cooperate with audit and supervisory bodies.