The central bank of Kyrgyzstan is the National Bank of the Kyrgyz Republic. It heads all 20 banks in the system, the savings bank, three former specialized state banks that have been converted into joint-stock commercial banks, two foreign joint-venture banks, and commercial banks. The specialized banks still dominate the allocation of credit and the taking of deposits, although some smaller banks are starting to challenge the major banks. However, many of the country's commercial banks have only one office. The larger banks have large bad loan portfolios; Promstroybank (Construction Bank) had 80% of its loans overdue at the end of 1994. Bank failures and bank consolidation were common during the late 1990s.
The NBK, formerly the local branch of Gosbank (the State Bank of the former Soviet Union), began to operate independently in December 1991 and is intended to perform all the functions of a central bank. The government has stuck with a tight monetary policy. The currency unit was initially the ruble following independence; however, with IMF support, the government introduced a new currency, the som, in May 1993 in order to stabilize the economy, avoid the inflation of the ruble, and attract foreign investment. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $114.9 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $170.2 million. The money market rate, the rate at which financial institutions lend to one another in the short term, was 11.9%.
The country has a small stock exchange, opened in May 1995. As of January 1996, 298 companies issued securities, with 7 trading on the stock exchange.