The bank of issue is the Central Bank of Belize. Two foreign banks, Barclay's Bank and the Bank of Nova Scotia, and two local banks, the Atlantic Bank and Belize Bank, conduct commercial banking. The Banking Ordinance was amended in 1996 to authorize offshore banking; in March 2000 over 14,000 offshore financial institutions were operating in Belize. Anti-laundering legislation was put into effect in 1998, and a small farmers' and business bank was created with bilateral aid from Taiwan.
In the fourth quarter of 1996, the Central Bank of Belize was obliged to defend the exchange rate by selling foreign exchange to commercial banks. The quantities involved were not announced, but international reserves fell from US $71 million at the end of September 1996, to US $65 million at the end of December 1996. However, year-end reserves were still significantly higher than the end-of-June figure of US $39 million. Contributing to this rise was the receipt in August of a Taiwanese government loan of US $26 million, as well as the proceeds of a bond issue for the new Central Bank building and increased sugar export receipts.
In 1998, the new government led by Said Musa lowered the liquidity and cash reserve requirements of commercial banks, and increased government spending on capital projects, in order to increase funds. Foreign assets had declined even further, from US $65 million in 1997 to US $51 million in 1998. A US $50 million loan from the Taiwanese government was granted for infrastructure development in 1998. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to US $189.8 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small-time deposits, and money market mutual funds—was US $505.5 million. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 12%.
There is no securities exchange in Belize.