The State Central Bank of Turkmenistan (SCBT) is charged with issuing currency and executing a monetary policy, and represents the top tier of a two-tiered banking system. Commercial banks are responsible for collection, settlement, and handling of assets for clients and other banks. The State Bank for Foreign Economic Activities has been established to provide hard currency credits for foreign economic activities.
The government has not released details of monetary policy since Turkmenistan left the ruble zone in November 1993. The currency reform involved a high degree of confiscation. Since then, the government is thought to have severely contracted the money supply in real terms as part of its bid to tackle inflation.
The banking decree of 20 February 1995 stated that: 75% of 1994 bank revenue was to be used for capital expenditure projects; banks were to lend to state-owned firms at an annual interest rate of 15%; and all excess bank profits were to be transferred to the state. Turkmenistan's banks are shackled with the usual problems of the former communist bloc. The Turkmen banks are poorly capitalized, have large loss-making portfolios to state-owned enterprises, and are burdened by an antiquated payments system which builds up arrears with ease.
Sberbank (the State Savings Bank) ranks second behind the SCBT in significance, holding most household deposits, and is still state-owned. The local branch of Vneshekonombank has been incorporated as an independent foreign trade bank, and is also state-owned. Investbank is the industrial sector bank and Agroprombank the agricultural sector bank. Both are state-owned via stock distributed to state-owned enterprises. In 1994, there were ten further banks owned by state enterprises, two cooperative banks and two private banks.