The Vice President of Mongol Bank, B.Lkhagvasuren, gave an interview regarding the central bank’s new currency trading platform that will allow commercial banks to buy and sell foreign currency. Individual customers, businesses, and non-banking financial institutions will be able to utilize the platform through the banks.
Can you explain the reason why Mongol Bank is using the currency trading platform for banks?
Most of you are aware of the value fluctuation the MNT has experienced in the last four years. Even though the fluctuation can mostly be attributed to macroeconomic factors and the state of the domestic and foreign economy, the development of the currency market also has a lot to do with it. Mongol Bank, the Ministry of Finance, and the Financial Regulatory Committee were delegated responsibility for improving the infrastructure of the currency trading market. In line with that, Mongol Bank has officially implemented the new currency trading platform.
What is different about online trading platforms?
To put this in simple terms, it is a large currency trading system between banks. Commercial banks based in Mongolia will directly engage with the platform. Individuals, businesses, and non-banking financial institutions can buy and sell currency through one of the commercial banks. As of right now, 11 banks are actively trading on the platform.
What is the advantage of implementing an online trading platform?
In the past, the system of currency trading between banks was done by telephone. It was a tedious and time consuming process that also carried a lot of risk. Due to this, currency trading between banks did not develop very well. By using the trading platform, all banks will be able to receive the same information about the market at the same time. Allowing individuals, businesses, and non-banking financial institutions to participate in the system through a commercial bank ensures the transparency and reach of the platform.
What are the upcoming projects that Mongol Bank will implement?
The establishment of a currency trading platform between commercial banks is a significant step in the development of the currency market. Mongol Bank, the Finance Ministry, and the Financial Regulatory Committee have formed a working group to create a large, encompassing platform that will allow individuals, businesses, and non-banking financial institutions to directly participate in trading without having to go through a bank. The working group plans to finish the larger platform in 2017. This will not only transform the Mongolian currency market, but is also the first step in reforming the Mongolian securities market.