According to a 2003 International Monetary Fund review, "Mongolia has made great strides during the last decade in fostering a market economy and promoting macroeconomic stability."

The banking system is two-level (since 1991), with the Bank of Mongolia providing policy guidance atop a number of commercial banks. The Bank of Mongolia's efforts have been focused on maintaining a tight monetary policy, the stabilization of currency values and the reduction of inflation.

In recent years the government of Mongolia has embarked on a major privatization initiative, with the biggest bank, the Trade and Development Bank, sold to a Swiss-American consortium and the Agriculture Bank sold to a Japanese group. Other likely candidates for privatization include the largest cashmere garment company and the state airline.

Beginning in 1994, the Mongolian economy has responded well to the transition to a free-market system, delivering solid gains in domestic gross product, including GDP growth of 3.4 per cent in 2003.

Mongolia's economy is driven by cashmere (25-plus per cent of the world's output), copper, livestock and gold.