Before the establishment of Central Bank, the important function of a central bank, namely, the issue of currency was carried out in different ways. Either the currency or coins of other countries were used or those issued by the then Governments served as the medium of exchange..
Until 1970, Oman had no body whatsoever to supervise the monetary and banking system. With the introduction of its own national currency in Oman, a need arose to establish an authority to deal with currency management, and a monetary authority called Muscat Currency Authority was established in 1970 for purpose of printing, issue and redemption, management and safekeeping of the new currency.
Subsequently in 1972, when the name of the country was changed from “ Sultanate of Muscat and Oman, to Sultanate of Oman, a new currency named Rial Omani , which is in circulation till date, was introduced , and the Muscat Currency Authority was replaced by the Currency Board.
With the significant expansion in banking and economic activities thereafter in the country thanks to wise and visionary leadership of His Majesty Sultan Qaboos Bin Al Said , a strong need was felt to have a comprehensive legislation to govern the activities of the banking system, and accordingly, the Central Bank Of Oman was established through the Banking Law of 1974.