linguistic:paraphrasing, quality:correction, stylistic:tone, information:extraction
Monetary and payment system

The Central Bank of Somalia is the official monetary authority of Somalia. In terms of financial management, it is in the process of assuming the task of both formulating and implementing monetary policy.

Owing to a lack of confidence in the local currency, the US dollar is widely accepted as a medium of exchange alongside the Somali shilling. Dollarization notwithstanding, the large issuance of the Somali shilling has increasingly fuelled price hikes, especially for low value transactions. According to the Central Bank, this inflationary environment is expected to come to an end as soon as the bank assumes full control of monetary policy and replaces the presently circulating currency introduced by the private sector.

Although Somalia has had no central monetary authority for more than 15 years between the outbreak of the civil war in 1991 and the subsequent re-establishment of the Central Bank of Somalia in 2009, the nation's payment system is fairly advanced primarily due to the widespread existence of private money transfer operators (MTO) that have acted as informal banking networks.

These remittance firms (hawalas) have become a large industry in Somalia, with an estimated US$1.6 billion annually remitted to the region by Somalis in the diaspora via money transfer companies. Most are members of the Somali Money Transfer Association (SOMTA), an umbrella organization that regulates the community's money transfer sector, or its predecessor, the Somali Financial Services Association (SFSA). The largest of the Somali MTOs is Dahabshiil, a Somali-owned firm employing more than 2,000 people across 144 countries with branches in London and Dubai.

With a significant improvement in local security, Somali expatriates began returning to the country for investment opportunities. Coupled with modest foreign investment, the inflow of funds have helped the Somali shilling increase considerably in value. By March 2014, the currency had appreciated by almost 60% against the U.S. dollar over the previous 12 months. The Somali shilling was the strongest among the 175 global currencies traded by Bloomberg, rising close to 50 percentage points higher than the next most robust global currency over the same period.

The Somalia Stock Exchange (SSE) is the national bourse of Somalia. It was founded in 2012 to attract investment from both Somali-owned firms and global companies in order to accelerate the ongoing post-conflict reconstruction process in Somalia.