The Bank of Tanzania came into operation on June 14th 1966, under the Bank of Tanzania Act,1965. The Act empowered the Bank of Tanzania to perform all the traditional central banking functions.

The Bank of Tanzania Act, 1995 replaced the earlier Act with the primary objective of establishing monetary conditions conducive to Price Stability over time.

The objective is to formulate and implement monetary policy following on maintaining price stability conducive to equitable and sustainable growth of the national economy of Tanzania.

The Bank of Tanzania (BOT) bears the responsibility of establishing a conducive monetary stipulations that will generate low and stable inflation over time. As it is disclosed in the BOT Act, 1995 section 5 (3), "The primary objective of the Bank shall be to formulate and implement monetary policy, directed to the economic objective of maintaining price stability, conducive to a balanced and sustainable growth of the national economy of Tanzania.