The republican government set up the Yemen Currency Board in 1964 with a capital of YR 2 million; in 1971, the Currency Board was replaced by the Central Bank of Yemen (CBY). The state-owned Yemen Bank for Reconstruction and Development (YBRD), founded in 1962, finances development activities, and the International Bank of Yemen, organized in 1980, operates as a commercial bank. In the 1970s, the YBRD dominated the banking business, controlling some 70% of the loans outstanding in the YAR; during the same decade, a number of foreign commercial banks, including ones from Hong Kong, Iraq, Pakistan, the United States, and the United Kingdom, opened offices in Sana.
The economic recovery in 1995 and the partial liberalization of interest rates on bank deposits appear to have succeeded in encouraging the growth in savings as reflected in higher quasi-monetary holdings. In 2002, there were eleven commercial banks (9 private and 2 public) and two public sector specialized banks (Agriculture and Housing) operating under the jurisdiction of CBY. There were also three Islamic banks in operation. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.7 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $3.4 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 15.16%.
There are no securities exchanges in Yemen.