The Banco de Moçambique (BM) was established in 1975 by Decree No.

2/75 of May 17, under the

commitments undertaken in the Lusaka Accords in 1974. It inherited the assets and values of the
Department of Mozambique from the Banco Nacional Ultramarino.

According to Article 132 of the Constitution of the Republic of Mozambique, the BM is the central bank
of the Republic of Mozambique and shall be governed by a specific legislation and the applicable
international standards to which the Republic of Mozambique is bound.

The process of liberalizing the Mozambican economy, under the Economic Rehabilitation Program (PRE)
in 1987, promoted the reform of the national financial system that culminated with the separation of
the commercial and central functions of the bank.

The institutional separation of the BM's commercial function from its role as central bank took place in
1992, with the approval of Law 1/92, of 3 January - Organic Law - which defines the nature, objectives
and functions of the BM as the central bank. Indeed, the Bank's Organic Law establishes that the BM is
the central bank of the Republic of Mozambique, whose main objective is the preservation of the
national currency.

The history and evolution of the Bank is indelibly linked to the evolution of the country and its economic
and social policies, particularly in the first decade after Independence.

One of the BM's major tasks was the replacement, on June 16, 1980, of the colonial currency (the
escudo) with the metical, an operation that was carried out with great success and in a short space of
time.

The Bank of Mozambique has its headquarters in Maputo, capital of Mozambique, and delegations in
provincial capitals.

The key functions of the BM are:

Banker to the Government;

Government's financial advisor;

Advisor and supervisor of the monetary and exchange rate policies;

Administrator of the country's external assets;

Intermediary in international monetary relations;

Supervisor of financial institutions.

Organic Law - January 3, 1992

The current political and economic outlook of the country pushes credit institutions towards taking a
new position as drivers of economic development.

The implementation of the Economic Rehabilitation Program of the Banco de Moçambique, alongside
international financial institutions, added to the need for greater functionality of the central bank as a
maker and manager of monetary and credit policy, and supervisor of the national financial system.

The aforementioned make for the grounds for the establishment of Law No. 1/92, of January 3 - Organic
Law of the Banco de Moçambique.
The origin of banks is linked to the development of commerce, but they have come a long way to reach
the international system that extends across the planet.

Currently, in addition to traditional banks, there are digital banks that provide a completely virtual
experience for customers. Banks are regulated by the Central Bank of each country, which has the
function of issuing money, capturing financial resources and regulating commercial and industrial banks.

In a way, banks emerged thousands of years ago, with records of financial institutions existing as far
back as Mesopotamia around 2000 BC, where temples received deposits of grain and precious metals
and granted loans to merchants.

In China, in the 7th century, exchange offices emerged to exchange currencies from merchants from
different regions, who later began to offer banking services such as deposits and loans.

In the West, it is believed that the first banks appeared in Italy from the 12th century onwards, known as
“deposit banks”. However, there is no proof that they worked with unknown third-party resources or set
up a network capable of multiplying deposits with continuous loans.

The first large-scale banking institution arose from the Order of the Knights Templar, founded in
Jerusalem around 1118. They dedicated their lives to the service of the Church and the task of liberating
the Holy Places, but later became entrepreneurs, managing the largest banking corporation
international for almost 200 years.

The first modern bank, Banco di San Giorgio, dates back to 1406, in Genoa, Italy. The first electronic
banking services only appeared in 1983, in Scotland.
Where and when did banks appear?

It is believed that the first banking operations in history were developed in the Phoenician civilization.
However, the name bank was conceived by the Romans: it meant the table on which coins were
exchanged.

With the flourishing of commerce at the end of the Middle Ages, the role of banker emerged and
became something very common in Europe.

During the Middle Ages, banking gained momentum in the commercial cities of Europe. Notable Italian
bankers, such as the Medici, established banking houses, playing crucial roles in financing trade and
international transactions.

The increasing need for financing at medieval fairs stimulated the development of financial instruments
such as bills of exchange, marking an important phase in the evolution of the banking system.

The Bank of Venice is considered the first commercial bank in the world. It was established in Venice,
Italy, in 1157. Its function was to finance monarchs in their commercial activities and international
transactions.

The foundation stone of the banking system, however, was laid in another Italian state, Genoa, by the
Banco di San Giorgio, in 1406. This bank was quite long-lived, operating for almost 400 years, until its
closure in 1805.

Banks and the origin of money in banknotes

As the European economy developed, bankers began to accept monetary deposits.

As proof that people had reserves with banks, certificates known as goldsmith’s notes were issued in
London banks. For the deposited amounts to be redeemed, it was enough to present the certificate and
withdraw all or part of the saved amount.

such as current accounts, savings, investments, credit cards, transfers, payments and checks. They also
provide custody (safekeeping) of money and assets.
Banks grant credit to individuals and companies, allowing them to finance projects, buy goods or invest
in their activities. This boosts consumption and investment in the economy.

Therefore, banks encourage savings by offering interest-bearing savings accounts. They also facilitate
investing by allowing people to buy stocks, bonds, and other financial assets.

Banks manage the payments system, allowing people to transfer money securely and efficiently,
facilitating business and personal transactions.

How do banks work?

Banks are financial institutions that raise funds from customers (individuals, companies, industries
and/or government) through deposits and use them to grant loans to other customers, charging interest
on these operations. In this way, banks help in the circulation of money and the development of
national and international trade.

They earn profits through interest and fees charged for transactions such as account maintenance fee,
loan interest, fees, etc. Institutions are regulated by the Central Bank (or corresponding body in each
country), which has functions such as issuing money, capturing financial resources and regulating
commercial and industrial banks.

A bank is a financial institution that accepts deposits from the public and creates a demand deposit and
at the same time makes loans.

Lending activities can be carried out directly by the bank or indirectly through capital markets.

Although banks play an important role in a country's financial stability and economy, most jurisdictions
exercise a high degree of regulation over banks. Most countries have institutionalized a system known
as the fractional reserve system, under which banks hold liquid assets equal to only a portion of their
current liabilities. In addition to other regulations designed to ensure liquidity, banks are generally
subject to minimum capital requirements based on an international set of capital standards, the Basel
Accords.

Banking, in its modern sense, evolved in the 14th century in the prosperous cities of Renaissance Italy,
but it functioned in many ways as a continuation of ideas and concepts of credit and lending that had
their roots in the ancient world. In the history of banking, a series of banking dynasties – namely, the
Medicis, the Fuggers, the Welsers, the Berenbergs and the Rothschilds – played a central role over many
centuries. The oldest existing retail bank is Monte dei Paschi di Siena (founded 1472), while the oldest
existing commercial bank is Berenberg Bank (founded 1590).