Director General of the department: B. Amgalan
Core function of the department: The Financial Stability Department is primarily responsible for supporting the stability of the banking and financial system by identifying and assessing systemic risks, formulating macroprudential policy measures aimed at mitigating such risks, and evaluating the effectiveness of their implementation. In addition, it is responsible for implementing bank restructuring and resolution policies, administering the stabilization fund, as well as developing and executing policies on sustainable development and green finance.
Macroprudential Policy Division
Overview
The Macroprudential Policy Division is responsible for identifying and assessing risks within the banking and financial system. Its primary role is to develop macroprudential policy proposals aimed at preventing the accumulation of systemic risks and mitigating financial cycle fluctuations, and to present the proposals to the Monetary Policy Committee (MPC) of the Bank of Mongolia.
Functions
1. Systemic Risk Identification and Assessment The division regularly evaluates vulnerabilities accumulating in the financial system, including excessive debt growth, credit cycles, asset price bubbles, liquidity pressures, and interconnectedness risks among financial institutions. Furthermore, it analyzes the risk profiles of individual banks and Systemically Important Financial Institutions (SIFIs), assessing their resilience to adverse shocks through scientific quantitative modelling and stress testing.
2. Policy Formulation and Impact Evaluation The division refines macroprudential policy instruments designed to mitigate cyclical and structural risks. Based on systemic risk assessments, it develops proposals for policy actions to be discussed and decided upon by the MPC. This includes collaborating with the Financial Regulatory Commission (FRC) to align and implement macroprudential tools within the non-bank financial sector. Additionally, it continuously monitors the impact of implemented measures (such as LTV and DSTI) on financial stability, credit growth, household debt burdens, and market behavior to recommend the continuation, adjustment, or phase-out of specific instruments.
3. Secretariat of the Financial Stability Council (FSC) The division functions as the Secretariat for the Financial Stability Council, handling all preparations for council meetings, developing meeting materials, and providing members with necessary research and data. It is a permanent unit responsible for organizing meetings, recording minutes, consolidating reports on the implementation of council decisions, and managing daily organizational workflows and information exchange among member organizations.
4. Research, Reporting, and Policy Communication The Macroprudential policy division prepares the Financial Stability Report and informs the public on the current conditions of banking and financial system, emerging risks, and the following measures undertaken by the regulatory authorities to mitigate the risks. This contributes to enhancing policy transparency, policy implementation, guiding market expectations appropriately, and improving public understanding.
Bank Resolution Division
Overview
The Bank Resolution Division is responsible for developing and implementing the regulatory framework, policies, and procedures governing bank resolution and compulsory liquidation, in compliance with applicable banking legislation and aligned with international best practices.
The division formulates, regularly updates, and enforces regulations, policy and procedures in regard to bank recovery, resolution planning, and resolution implementation. It also prepares and submits approval resolution strategies and action plans for banks experiencing financial distress.
Within this mandate, the division evaluates recovery plans submitted by banks and, with the objective of safeguarding financial stability and soundness, develops resolution plans and alternative resolution options. It further organizes and oversees the implementation of compulsory liquidation measures where necessary.
In addition, the division administers the operations of the Bank Stabilization Fund to support the protection of depositors’ interests and the stability of the financial system. This includes the collection, monitoring, and management of fund contributions, ensuring compliance with relevant regulations, and preparing proposals for the allocation of the Fund’s resources in accordance with legal requirements.
Sustainable Development and Green Finance Policy Division
Overview:
The division’s primary objective is to establish a database on climate change related risks in the banking sector, assess vulnerabilities, implement regulations aimed at strengthening banks’ risk management, reporting, and financial disclosure practices. The division also supports and develops legal framework and market infrastructure necessary to diversify banks’ portfolio and promote the growth of green lending, thereby reducing both physical and transition risks.
Within the framework of the Bank of Mongolia’s core mandate, the division formulates and implements policies and guidelines on sustainable development, financial inclusion, and green finance in the banking sector, in alignment with Mongolia’s national development plans and financial stability objectives.
The division cooperates with domestic and international organizations on issues related to sustainable development, financial inclusion, and green finance. It also regularly implements technical assistance in cooperation with international financial institutions and organizes training courses and seminars to build capacity and improve the legal and regulatory environment.
Functions:
- To formulate, implement, and enforce the Bank of Mongolia’s policies and directions on sustainable development and green finance in alignment with Mongolia’s national development plans and strategies, and the goals and objectives issued by the Financial Stability Council;
- To assess the impact of climate change and environmental risks on financial stability, assess vulnerability, create the necessary database, research international best practices, principles, and regulatory frameworks related to sustainable development and green finance in the banking sector, and formulate suitable policies for approval;
- To create and improve Bank of Mongolia’s database on sustainable development, green finance, and other relevant areas, and monitor its quality;
- To continue cooperation with international organizations in areas related to financial inclusion, develop policy and regulatory proposals for review and approval;
- To implement technical assistance programs in areas related to sustainable development and green finance in cooperation with international organizations, monitor and report its implementation, cooperate with international and domestic consultants and provide necessary information, and, based on its results, formulate policy proposals for approval