Guinea-Bissau - Banking and securities
A savings and loan bank and a postal savings bank, both domestically owned, operate in Bissau. There are no securities exchanges in Guinea-Bissau. On 2 May 1997, the Guinea-Bissau escudo was replaced by the CFA franc. The exchange rate was set at CFA F1:P65, as the escudo was gradually phased out. A team of technical experts from the Banque central des états de l'Afrique de l'ouest (BCEAO, the regional central bank) trained senior officials from the Banco Central de Guiné-Bissau (BCGB) in the management and accounting methods required by UEMOA (the monetary union of the West African subregion of the Franc Zone).
The first investment bank in Guinea-Bissau, Banco Africano Ocidentale (BAO), was established in the first quarter of 1997 with joint Portuguese and Guinea-Bissau capital, and became the countries first commercial bank in 2001. In 1999, three executives at the BCGB were accused of embezzling $4.3 million since Guinea-Bissau joined the Franc Zone.
The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $81.2 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $82.3 million. The money market rate, the rate at which financial institutions lend to one another in the short term, was 4.95%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 6.5%.