Central Bank of Azerbaijan

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Central Bank of Azerbaijan
Azərbaycan Mərkəzi Bankı
Headquarters Baku, Azerbaijan
Coordinates 40°22′43.18″N 49°50′43.39″E / 40.3786611°N 49.8453861°E / 40.3786611; 49.8453861
Established 11 February 1992
Governor Elman Rustamov
Central bank of Azerbaijan
Currency Azerbaijani manat
ISO 4217 Code AZN
Bank rate 5.25%
Website http://www.cbar.az

The Central Bank of Azerbaijan (CBA, Azerbaijani: Azərbaycan Mərkəzi Bankı) is the central bank of Azerbaijan Republic. The headquarters of the bank are located in the capital city Baku. Is established on the basis of the State Bank, the former USSR Promstroybank, the Agroprombank of the USSR pursuant to the Decree of President of the Republic of Azerbaijan on Launch of the National Bank of the Republic of Azerbaijan, dated 11 February 1992.

History[edit]

The Charter of the Azerbaijan State Bank was approved on September 16, 1919 shortly after the establishment of the Azerbaijan Democratic Republic on May 28, 1918 and on September 30 the Bank started functioning.

Occupation of Azerbaijan by bolshevik Russia on April 28, 1920 resulted in the liquidation of the existing financial-credit system of the country. The State Bank of Azerbaijan was renamed the Azerbaijan Peoples` Bank. All banks and other credit institutions were nationalized and merged to the Peoples` Bank. Thus, the banking business was exclusively monopolized by the state.

Article 14 – Banking System and Money Circulation – of the Constitutional Law on the Basis for Economic Independence of the Republic of Azerbaijan, dated May 25, 1991, stipulated the legal basis of the independent banking system and circulation of the national monetary unit of Azerbaijan, as well as set the status and authorities of the central bank.

The restoration of the state independence on October 18, 1991 set a legal basis for the launch of the banking system of the independent Republic of Azerbaijan, including the central bank.

In line with the Constitutional Law, at the Decree of President of the Republic of Azerbaijan on Launch of the National Bank of the Republic of Azerbaijan, dated 11 February 1992, the National Bank of the Republic of Azerbaijan was established on the basis of the State Bank, the former USSR Promstroybank, the Azerbaijani bank of the Agroprombank of the USSR.

The law on the National Bank of the Republic of Azerbaijan of 1992, 1996, and 2004 set, strengthened and developed the legal status and authorities of the central bank of independent Azerbaijan.

As a result of the National Referendum of 18 March 2009, the bank (“The National Bank of the Republic of Azerbaijan”) was renamed “The Central Bank of the Republic of Azerbaijan”.

Goals and functions[edit]

Under the Law of the Republic of Azerbaijan on the Central Bank of the Republic of Azerbaijan dated 10 December 2004, the primary goal of the Central Bank is to ensure price stability within its authorities. The goal of the Central Bank is also to ensure stability and development of the banking and payment systems.

In order to achieve its goals the Central Bank:

  • determines and implements monetary and foreign exchange policy of the country;
  • organizes cash circulation;
  • issues banknotes to and withdraws from circulation;
  • regularly determines and announces an official exchange rate of manat;
  • provides foreign exchange regulation and control under the legislation;
  • maintains and manages international gold and foreign exchange reserves in its charge;
  • develops a reporting balance of payments and participates in development of the projected balance of payments of the country;
  • licences and regulates banking activities and provides banking supervision in accordance with the law;
  • determines, coordinates and regulates activities and provides oversight of payment systems;

Structure and management[edit]

Organizational structure of the Central Bank includes the Management Board, the central apparatus and regional offices. The central apparatus of the Central Bank consists of internal audit division and other structural units, established by the Management Board. The Central Bank is governed by the Management Board, which consists of 7 members: the chairman, four members employed with the Central Bank on a permanent basis, and two external members. Members of the Management Board are appointed for 5 years. The Central Bank is solely accountable to President of the Republic of Azerbaijan.

Mission and ownership[edit]

CBA is Azerbaijan's monetary authority, and is responsible for the conducting the country's monetary policy and regulation of the banking and payment system. Primary objective of CBA as stated in the Act on CBA is price stability. Secondary objective is to support a banking and payment stability.[1]

The CBA is owned by the Republic of Azerbaijan and managed by the Executive Board of the CBA. The Board is responsible for the supervising the administration and activities of the bank and for other statutory tasks. The bank is governed under the Act on the CBA, passed in 2004.

The bank has regional branch offices in Nakhchivan, Ganja, Yevlakh, Khachmaz, Goychay and Bilasuvar

Executive Board[edit]

The Executive Board is composed of the Governor, who is the chairman of the Board, and 4 members appointed in double process by President and the National Assembly.

Governor - Elman Rustamov

Board Members - Alim Guliyev, Aftandil Babayev, Vadim Khubanov and Khagani Abdullayev[2]

Monetary policy[edit]

A limitation on FDI in the banking sector was reduced when the CBA increased the limit on participation of banks with foreign ownership from 30 to 50 percent of the commercial banking market. In June 2002, the NBA liberalized some overseas transfer provisions for Azerbaijani legal residents, including an increase of advance payments for import transactions from $10,000 to $25,000 and waiver of all restrictions for withdrawing foreign currency in cash.

During the world economic crises in 2008-2009 monetary policy orientation of Central Bank of Azerbaijan has strictly expanded: refinancing rate was cut down from 15% up to 2%, reserve requirement ratio form 12% up to 0.5%.[3] In exchange rate policy CBA maintained financial stability holding a pegged regime against the US dollar.[4]

In postcrisis period some elements of economic overheating started to appear and Central Bank of Azerbaijan reacted with a tightening of monetary policy since Autumn of 2010. So, refinancing rate was gradually enhanced up to 5.25 percent.

See also[edit]

References[edit]

External links[edit]