Banking in Kyrgyzstan

[1] In mid-1994, the government established the Bank for Reconstruction and Development, which uses state funds, foreign currency assets, and loans from abroad to aid small and medium-sized enterprises and to invest in targeted spheres of the economy, especially housing, construction, power generation, and agriculture.

[1] Because new commercial banks were small and initially were owned by state ministries and state-owned enterprises, competition developed slowly.

[1] In addition, the National Bank had been plagued by scandal; the first director, an Akayev protégé, was linked to several illegal financial operations in 1993 and 1994.

[1] As of 1994, the limitations of the banking system had made it unable to efficiently mobilize and allocate financial resources into the national economy.

[1] This failure hindered privatization and other types of economic reform that require substantial amounts of risk capital upon which borrowers can rely.