Somalia - Banking and securities
The Central Bank of Somalia, a government institution with branches in every region, controls the issue of currency and performs the central banking functions of the state. All banks were nationalized in 1970. The Central Bank was set up in 1960. The Commercial and Savings Bank, formed in 1975 from a merger of the National Commercial Bank and the Somali Savings and Credit Bank, was closed in June 1990. The Somali Development Bank was created in 1983, and the Commercial Bank of Somalia was opened in July 1990. The formal banking system no longer functions.
As of 1996, the Somali shilling was still widely in use despite the lack of a government to back the currency, which was holding its value because there were no new notes. In 1999, the mass distribution of counterfeit Somali shillings reduced the value of the shilling against the US dollar from 7.5 to 10,000. The exchange rate was at 2,600 in 2000. Four competing versions of the national currency were reported to be in circulation.
A new bank, the Barakat Bank of Somalia, was established in Mogadishu at the end of October 1996. Initially capitalized at $2 million, the bank intended to use the dollar as its working currency; and to specialize in small loans to Somali traders, foreign currency exchange, and currency transactions abroad. The bank aimed to establish a further 90 branches across the country.
There are no securities exchanges in Somalia.