The Japan Special Fund, funded by the Government of Japan and administered by ADB, will provide a $2 million technical assistance grant to strengthen institutional capacity for banking supervision. It will also review the regulatory environment and help develop guidelines to strengthen corporate governance and improve risk management.

The expected outcome of this project will be the establishment of an improved policy and operating framework for managing risks in the banking sector and for resolving the problem of distressed assets, which in turn will help deliver a strong, broad-based economic recovery.

Mongolia's economy has come under pressure as a result of the global downturn, with copper prices slumping and domestic growth slowing sharply since the end of 2008. This in turn has caused a weakening of the country's financial institutions.

The central bank is the executing agency for the project, which is due for completion by the end of 2012.#