Papua New Guinea - Banking and securities
The Bank of Papua New Guinea, the country's central bank, was established in 1973, and the currency, the kina, was first issued in April 1975. The kina is backed by a standby arrangement with Australia, and the value of the kina is tied to the Australian dollar.
The Papua New Guinea Banking Corp. was set up in 1973 to take over the savings and trading business of the former Australian government-owned bank operating in Papua New Guinea. It competes with seven other private commercial banks, three of which are subsidiaries of Australian banks. Liquidity increased over the first six months of 1996, with total liquid assets held by the commercial banks standing at $2.1 billion at the end of 1996. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $376.6 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $846.1 million. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 11.25%.
There is no securities exchange in Papua New Guinea.