IMF Working Papers

Macroprudential Policies for a Resource Rich Economy The Case of Mongolia

ByRodolfo Maino, Patrick A. Imam, Yasuhisa Ojima

January 22, 2013

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Rodolfo Maino, Patrick A. Imam, and Yasuhisa Ojima. "Macroprudential Policies for a Resource Rich Economy The Case of Mongolia", IMF Working Papers 2013, 018 (2013), accessed 11/15/2025, https://doi.org/10.5089/9781475594881.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper explores the extent to which macroprudential tools can be used to manage banking sector risks in Mongolia, a commodity producing country exposed to both procyclical and cross-sectional financial sector risks. Loose fiscal policy, rising credit activity, and heightened risk appetite—attributable to the commodity boom—are fuelling price volatility in asset markets, posing significant risks to financial stability if left unchecked. Rising interconnectedness, potential increase in dollarization and concentrated exposures are compounding those risks. Macroprudential tools can complement fiscal and monetary policy adjustments to avoid the buildup of vulnerabilities in the banking sector.

Subject: Banking, Commercial banks, Credit, Financial institutions, Financial sector policy and analysis, Financial sector stability, Macroprudential policy, Money, Systemic risk

Keywords: bank financial system regulator, banking system in Mongolia, Commercial banks, cost of capital, Credit, Financial sector stability, financial system, foreign exchange, Global, heightened risk appetite, inflation rate, Macrofinancial Linkages, Macroprudential Policies, Macroprudential policy, monetary policy, monetary policy tool, Mongolia, Mongolia context, Mongolia's financial system, natural resource curse, resource allocation, risk identification, Systemic Risk, WP

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