Financial Capacity Development Project

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The objective of the Financial Capacity Development Project is to support institutional capacity building of the Mongolian banking sector to reduce systemic risks and enhance financial intermediation. There are three project components. First, the Commercial Bank Risk Management component assists the participating banks in re-engineering their lending process and creating a strong credit culture. It will enhance the effectiveness of commercial banks' credit risk management and cxompliance with Bank of Mongolia regulations and international banking practices. For each of the three selected banks, an international specialist will be retained to work full time in a senior management position; allocations will also be made for short-term staff secondment in foreign commercial banks and risk management systems upgrading. Second, the payents systems modernization component assures the availability of an appropriate set of cost-effective payments systems and payments instruments that satisfy the evolving needs of all sectors of the economy with particular emphasis on the needs of government, business, and individual consumers to make and receive non-cash payments. Third, the Savings Bank Resolution component assists the governemtn to develop and implement a carefully managed divestiture process of the Savings Bank, to diversify systemic risks and reduce government subsidies.