Regulation on Monetary Policy Committee Activities

Annex to Order No. A-115 of the Governor of the Central Bank of Mongolia dated May 17, 2018

REGULATION ON THE ACTIVITIES OF THE MONETARY POLICY COMMITTEE

ONE. GENERAL PROVISIONS

1.1. The purpose of this Regulation is to regulate relations related to the activities, principles, meeting procedures, and public disclosure of decisions of the Monetary Policy Committee (hereinafter referred to as the Committee) as stipulated in Article 27³ of the Law on the Central Bank (Central Bank of Mongolia).

1.2. The activities of the Committee are aimed at ensuring the independence, openness, and accountability of the decision-making process for monetary policy, and enhancing public trust in the Central Bank.

1.3. The activities of the Committee shall adhere to the principles of collective decision-making, professionalism, accountability, and independence.

1.4. In accordance with Article 27³ of the Law on the Central Bank (Central Bank of Mongolia), the form of the Committee's activities is the meeting (hereinafter referred to as the "Meeting").

1.5. The Committee shall have an official seal in the established format.

TWO. ORGANIZATION OF THE COMMITTEE'S ACTIVITIES

2.1. The Committee shall consist of 7 members, in accordance with Part 1 of Article 27³ of the Law on the Central Bank (Central Bank of Mongolia), and members shall have equal voting rights on matters under discussion.

2.2. The form of the Committee's activities shall be regular and extraordinary meetings, as stipulated in Part 7 of Article 27³ of the Law on the Central Bank (Central Bank of Mongolia).

2.3. The schedule of meetings shall be approved by the Order of the Governor of the Central Bank of Mongolia in January of each year and published to the public.

2.4. Changes to the approved meeting schedule may be made no later than 3 working days before the established time, and the changed schedule shall be notified to members within 3 working days.

2.5. Documents related to the matters to be discussed shall be delivered to the members of the Committee in writing or by email no later than 5 working days before the Committee meeting.

2.6. The proposal to convene an extraordinary meeting shall contain a statement of the need to make a decision due to factors affecting the economic situation, regulatory environment, or financial stability.

2.7. A meeting shall be considered valid if no fewer than five members participate.

2.8. Members of the Committee (hereinafter referred to as "Members") shall attend meetings in person. Members are prohibited from providing their opinions on the matters under discussion in advance.

2.9. In accordance with the Law on the Central Bank (Central Bank of Mongolia), the Governor of the Central Bank of Mongolia shall chair the meeting, and in their absence, the person prescribed by law shall chair it.

2.9. If a Member is unable to attend the meeting for valid reasons, they shall notify the chairperson in advance.

2.11. The Committee shall have a Secretary General with the duties of approving the meeting schedule, notifying it, providing meeting preparations, adhering to the meeting rules and procedures, and delivering the Committee's decisions for enforcement and implementation. The Secretary General shall be appointed by the Order of the Governor of the Central Bank of Mongolia.

THREE. PROCEDURES FOR COMMITTEE MEETINGS

3.1. Within the scope of powers prescribed by law, the Committee's meeting shall discuss and decide on the following issues:

3.1.1. In accordance with Paragraph 1 of Part 4 of Article 27³ of the Law on the Central Bank (Central Bank of Mongolia), when discussing and deciding on the draft State Monetary Policy, the Committee shall discuss the draft measures to be implemented within the scope of monetary policy objectives. It may provide recommendations on the part related to the stability of the financial sector and the development of infrastructure and institutions.

3.1.2. Within the framework of ensuring price stability measured by the consumer price index, which is the main objective of monetary policy, the Committee shall discuss and decide on whether to set or change the interest rate of monetary policy instruments, in accordance with Paragraph 2 of Article 27³ of the Law on the Central Bank (Central Bank of Mongolia).

3.1.3. To increase the impact of the monetary policy interest rate on the economy, the Committee shall discuss and decide on whether to make changes to the mandatory reserve requirements and the appropriate ratio indicator, in accordance with Paragraph 3 of Part 4 of Article 27³ of the Law on the Central Bank (Central Bank of Mongolia).

3.2. The meeting consists of two stages: "First Discussion" and "Decision-Making".

3.3. The Committee shall discuss the issues specified in 3.1.1 of this Regulation only at the "First Discussion" stage.

3.4. At the "First Discussion" stage, the Department responsible for Monetary Policy shall present the current state of the domestic and foreign economy, future prospects, the results of other analyses included in the policy proposal, major risks that may arise in the economy, and other issues.

3.5. At the "First Discussion" stage, additional calculations, analyses, and research results that serve as information for policy decisions may be presented by other relevant departments.

3.6. Members shall first ask questions regarding the matters discussed at the "First Discussion" stage, and then express their position, opinions, and conclusions.

3.7. Representatives of the presenting department, relevant officials, and scientists/researchers conducting research in the field of monetary policy may participate in the "First Discussion" stage, present research results, express their opinions, and answer questions from members.

3.8. If no fewer than four members of the Committee consider it necessary to include additional calculations or new information regarding the future prospects of the current economic state, the "First Discussion" may be adjourned for rescheduling within the next 5 working days, with the approval of the Committee Chair.

3.9. The decision-making meeting shall be held within 3 working days after the "First Discussion" meeting.

3.10. At the decision-making stage, after the Department responsible for Monetary Policy presents the policy proposal, its justification, and policy alternatives, members shall express their opinions in favor or against, along with relevant justifications.

3.11. At the decision-making stage, the heads of the Department responsible for Monetary Policy, department directors, and other policy department heads may participate without voting rights, answer members' questions, and express opinions and conclusions regarding their respective areas of responsibility.

3.12. Members shall cast their votes by raising hands in an open ballot for the matters under discussion at the meeting, and decisions shall be made by majority vote.

3.13. When conducting a vote, a member shall exercise their voting right only personally; transferring this right to others or voting on behalf of others is prohibited.

3.14. After the policy decision is made, the draft monetary policy statement shall be discussed and approved, and the unified position of the Central Bank of Mongolia regarding the angle and method of delivering the decision to the public shall be determined.

3.15. If a Member considers that a conflict of interest may arise for themselves or their family members regarding the decision-making matter, they shall voluntarily abstain from voting and notify the chairperson in advance.

3.16. Audio and video recording by persons other than the Secretary General of the Committee is prohibited during the meeting.

3.17. In cases of urgent necessity or as specifically provided for by legislation, the meeting may be conducted in a closed format by decision of the Committee Chair.

FOUR. DISCLOSURE OF COMMITTEE DECISIONS

4.1. The Department responsible for Monetary Policy shall preliminarily prepare the draft resolution arising from the Committee meeting, obtain opinions from relevant departments, and finalize it.

4.2. Within 1 working day after the copy of the Monetary Policy Committee resolution is certified, the Secretary General shall deliver it to the relevant department via the Central Bank of Mongolia's Electronic Document Management System.

4.3. The Department responsible for Monetary Policy shall prepare the draft monetary policy statement in the following structure, not exceeding one page:

1. Date of implementation of the decision; meeting decision;
2. Brief explanation of inflation and near-term economic growth prospects, aligned with changes in the economy since the previous meeting;
3. Justification for the decision and its expected consequences;
4. If necessary, possible changes in the future policy outlook may be included.

4.4. The Chairperson of the meeting shall present the monetary policy decision and its justification through a press conference.

4.5. The monetary policy statement shall be posted on the website of the Central Bank of Mongolia and disclosed to the public.

4.6. The Department responsible for Monetary Policy shall translate the unofficial English version of the policy statement and post it on the website within 1 working day of the public dissemination of the statement.

4.7. The unit responsible for public education and information shall organize the press conference in accordance with the pre-scheduled plan.

4.8. To ensure transparency and accountability in the decision-making process of monetary policy, the Department responsible for Monetary Policy shall prepare the "Inflation Report," which contains information on the current and future prospects of the economy used in decision-making, and present it at the Committee meeting, followed by quarterly public disclosure according to the established schedule.

4.9. Within 14 calendar days after the monetary policy decision is disclosed to the public, the Department responsible for Monetary Policy shall prepare the meeting summary and post it on the website of the Central Bank of Mongolia.

4.10. The meeting summary shall have a standard established structure and include the following information:

1. List of issues discussed at the meeting;
2. Summary of the policy proposal presentation;
3. Summary of the justifications of members who supported and did not support the policy proposal;
4. Majority decision of the meeting and the percentage of votes.

4.11. The detailed minutes of the meeting, the list of issues discussed, and attached materials shall be transferred to the official responsible for classified matters, along with an audio recording, summarized quarterly by the 30th day of the following quarter;

4.12. The detailed minutes of the meeting shall be kept by the Office's execution responsible official (hereinafter referred to as the minute-taker), who shall accurately and fully record the words and opinions expressed by members regarding the issues discussed. It is prohibited to make changes to the content of decisions recorded in the meeting minutes at a later stage.

4.13. The minute-taker shall bear the responsibility of maintaining the confidentiality of the minutes they have kept.

FIVE. OTHER

5.1. To ensure the composition of the Monetary Policy Committee, the Governor of the Central Bank of Mongolia shall award bonuses to Committee Members and the Secretary General by Order.

5.2. The costs required for the Committee's activities shall be included in the annual budget of the Central Bank of Mongolia and spent in accordance with the relevant regulation.

5.3. A Member of the Committee, subject to the requirements, criteria, restrictions, and ethical norms applicable to officials of the Central Bank (Central Bank of Mongolia), shall have the following duties:

1. Adhere to the meeting schedule and participate in meetings;
2. Observe high ethical standards required to protect the reputation of the Central Bank of Mongolia and public trust in monetary policy;
3. Respect the positions of other members and maintain a unified position in the Committee's collective decisions;
4. When giving presentations, speeches, participating in interviews, writing articles, or conducting research to the public, avoid expressing personal positions on Committee decisions and make statements within the scope of the content of the Committee's collective decisions as disclosed to the public;
5. Not disclose confidential information of non-public information, nor disclose or misuse in any form the matters under discussion by the Committee, the course of the meeting, or draft decisions to others;
6. Not disseminate misleading information that confuses the public or affects the financial market in any form;
7. Observe meeting procedures and not hinder the normal course of the meeting;
8. Approach voting on policy decisions with calculation, research, and professionalism;
9. Not provide informational advantages to citizens or business entities.

5.4. Violation of this Regulation shall serve as grounds for liability within the framework of relevant legislation.

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