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The concept of a central bank relating to financial transactions in Botswana was conceived as a result of preparations of a monetary agreement with the neighboring country of South Africa. The negotiations failed and Botswana withdrew from the Rand Monetary Area. The final decision to create the Bank of Botswana was taken in the year 1975. The required Financial Institutions bills were passed by the Botswana government and arrangements were made to regulate the emerging financial structure.
The Bank of Botswana in Botswana commenced its financial operations from 1st July, 1975. Mr. H.C.L. Hermans was officially appointed the first governor of the bank. The Bank of Botswana is responsible for maintaining the integrity of Botswana currency, determination of domestic interest rates, and international currency exchange with the national currency as a benchmark and the empirical administration of the domestic financial institutions of Botswana. The Bank of Botswana is also responsible for the correct and effective utilization of foreign currency reserves in the African country. The bank initiated the circulation of Botswana's present currency-Pula in 1976.
