Mongolia's banking sector is undergoing a major transformation to foster diversified ownership and strengthen corporate governance

Byadran Lkhagvasuren (Governor BANK OF MONGOLIA)

Can you provide an update on the activities of the Bank of Mongolia in the mining industry?

As of June 2025, Mongolia’s foreign exchange reserves stood at approximately US$5.2 billion. The Bank of Mongolia is supporting efforts to increase this figure to US$5.5 billion. A key element is improving the monetization of revenues from state-owned mining enterprises, particularly Erdenes Mongol LLC.

The government’s ‘Gold-3’ initiative, building on previous gold purchase programs securing around 20 t/y, is a flagship policy backing this goal. The Bank of Mongolia plays a crucial role in promoting responsible and sustainable gold mining in the country. We collaborate with banks, regulators, and international partners to enforce high ESG standards throughout the gold supply chain. A significant achievement in this area is the establishment of regional assay laboratories in ASGM (artisanal and small-scale gold mining) zones, ensuring certified producers receive fair pricing aligned with the London Bullion Market Association benchmarks.

Our commitment to ethical supply chains is further underscored by joining the World Gold Council’s ‘London Principles’ and partnering with the Swiss Better Gold Association and Argor-Heraeus SA. These partnerships enable responsibly mined Mongolian gold to access global jewelry markets, providing financial incentives for local miners.

What recent reforms are shaping Mongolia’s banking sector?

Mongolia's banking sector is undergoing a major transformation. Amendments of the Banking Legislation in 2021, introducing a 20% ownership cap per shareholder and requiring joint-stock company structures, aim to foster diversified ownership and strengthen corporate governance. Despite initial challenges, the compliance deadline has been extended to 2026. Furthermore, the Bank of Mongolia is promoting a more inclusive environment, attracting foreign investment through the 2023 Law on Specialized Investment Banking and aligning the financial regulatory framework with the Basel Framework Pillar 2. Coupled with recent sovereign credit rating upgrades by major agencies, these reforms strengthen resilience and enhance Mongolia’s appeal to investors.

What are the Bank of Mongolia’s macro-financial priorities in the current global environment, and how is the country managing external risks?

Our primary focus remains on maintaining price stability and financial stability. Rising geopolitical tensions and supply chain disruptions challenge cross-border financial flows and trade, introducing greater uncertainty and cost pressures for domestic producers. Mongolia recognizes the strategic importance of deepening economic and financial ties with trading partners and multilateral institutions to build resilience.

One of the most significant macro-financial trends we are navigating is the continued ‘higher-for-longer’ interest rate stance adopted by major central banks around the world. This global shift has increased the cost of external borrowing and placed constraints on refinancing options for sovereign issuers. Despite these challenges, Mongolia has demonstrated sound fiscal management and debt strategy, successfully refinancing segments of its sovereign bond portfolio with no major external maturities until 2026.

Enhancing the country’s international financial infrastructure remains one of the priorities. Improving the resilience and efficiency of cross-border payment systems is essential to support growing trade and investment. A key milestone in this regard is the recent re-establishment and expansion of correspondent banking relationships. This development reflects Mongolia’s alignment with international regulatory and anti-money laundering standards and strengthens global confidence in our financial system.

Can you outline the plans, goals, and strategies of the Bank of Mongolia moving forward?

 Looking ahead, the Bank of Mongolia is committed to maintaining price and economic stability while safeguarding the overall soundness of the financial system. While inflationary pressures may persist in the short term, we expect inflation to gradually decline and return to target by early 2026. On the growth front, we expect the economy to expand by around 6% in 2025, supported by a robust recovery in the mining and agricultural sectors. In this context, the Bank will continue to pursue a cautious yet adaptive policy stance. We are closely monitoring both global uncertainties and domestic economic trends, and we remain actively engaged in managing credit growth and external sector risks.

The Bank of Mongolia is committed to supporting foreign investment in the banking sector, advancing the regulatory framework for sustainable and green finance, and strengthening climate risk assessment and stress testing across the financial system. We are placing a strong emphasis on developing payment systems, improving credit information infrastructure, bolstering legal protections for financial consumers, and prioritizing public financial literacy and policy transparency.

/Source: Global Business Reports – Mongolia mining 2025/