Yesterday, during a consultative meeting, the Bank of Mongolia (BoM) introduced its strategy to reduce interest rates and a document on the strategy that will be implemented within the next six months.
BoM President N. Byaratsaikhan said, “The BoM's policy documents on reducing interest rates are based on creating favorable economic, financial and legal frameworks, rather than adhering to a dictatorial approach that cannot be implemented for the long term.
If macro-economic and financial markets are not sustainable, an attempt to enforce the compulsory reduction of interest rates will lead to a lack of assets and economic and financial risks. Therefore, the strategy to reduce interest rates has been drafted with market principles in mind.”
According to D. Gan-Ochir, Director of the Research and Statistics Department of the BoM, in order to reduce interest rates, an appropriate macro-economic environment needs to be created and the governance and risk management capacity of the nation's commercial banks need to improve. The BoM's document includes 11 strategic objectives and an action plan. As of today, the average interest rate for a commercial bank loan is 20 percent, which is five percent higher than the average rate in other low income countries.
The central bank's strategy document forecasts the possibility of reducing interest rates by 5-10 percent. The meeting's participants highlighted the necessity of setting up basic conditions to facilitate the BoM's action plan, and suggested involving all relevant stakeholders in the process, such as the Financial Regulatory Commission and the Ministry of Finance, and recommended making the strategy more clear and rigourous.
Yesterday, during a consultative meeting, the Bank of Mongolia (BoM) introduced its strategy to reduce interest rates and a document on the strategy that will be implemented within the next six months.
BoM President N. Byaratsaikhan said, “The BoM's policy documents on reducing interest rates are based on creating favorable economic, financial and legal frameworks, rather than adhering to a dictatorial approach that cannot be implemented for the long term.
If macro-economic and financial markets are not sustainable, an attempt to enforce the compulsory reduction of interest rates will lead to a lack of assets and economic and financial risks. Therefore, the strategy to reduce interest rates has been drafted with market principles in mind.”
According to D. Gan-Ochir, Director of the Research and Statistics Department of the BoM, in order to reduce interest rates, an appropriate macro-economic environment needs to be created and the governance and risk management capacity of the nation's commercial banks need to improve. The BoM's document includes 11 strategic objectives and an action plan. As of today, the average interest rate for a commercial bank loan is 20 percent, which is five percent higher than the average rate in other low income countries.
The central bank's strategy document forecasts the possibility of reducing interest rates by 5-10 percent. The meeting's participants highlighted the necessity of setting up basic conditions to facilitate the BoM's action plan, and suggested involving all relevant stakeholders in the process, such as the Financial Regulatory Commission and the Ministry of Finance, and recommended making the strategy more clear and rigourous.
