Before the establishment of the Central Bank, the essential function of a central bank, namely issuing currency, was carried out differently. Either foreign currency or coins were used, or those issued by the then Governments served as the medium of exchange.
Until 1970, Oman lacked any body to supervise the monetary and banking system. With the introduction of its own national currency, a need arose to establish an authority for currency management. Consequently, the Muscat Currency Authority was established in 1970 for printing, issuing, redeeming, managing, and safeguarding the new currency.
Subsequently, in 1972, when the country's name was changed from “Sultanate of Muscat and Oman" to "Sultanate of Oman," a new currency named Rial Omani, which remains in circulation to date, was introduced, and the Muscat Currency Authority was replaced by the Currency Board.
With the significant expansion in banking and economic activities in the country, thanks to the wise and visionary leadership of His Majesty Sultan Qaboos Bin Said, a strong need arose for comprehensive legislation to govern banking system activities. Accordingly, the Central Bank Of Oman was established through the Banking Law of 1974.