Azerbaijani Central Bank publishes main directions of bank control for 2010

Business Materials 7 May 2010 12:43 (UTC +04:00)

Azerbaijan, Baku, May 7 / Trend N. Ismayilova /

Stress tests conducted by the Central Bank of Azerbaijan showed that the country's banking system is stable against possible external shocks, the report said. The status of the monetary policy implemented in the first quarter, the further challenges, as well as report of structural offices of the bank were discussed at the meeting.

It was noted that inflation targeting, which is the main objective of monetary policy, was at one-digit level in the reporting period. Basically, it subjected only to such factors as the processes occurring in foreign markets, inflation in the countries - trade partners of Azerbaijan and the seasonal factors.

In terms of balance payment surplus rate of manat against the U.S. dollar remained stable. Realizing the sterilization operations in the foreign exchange market, the bank further increased its foreign reserves. By the end of the year it is planned to get a large amount of surplus in balance of payments.

For the reporting period, the bank continued implementation of a soft monetary policy. In these circumstances, adequate money supply increased in relation to the economic growth rate, and interest rates showed the propensity to fall. During the first quarter, assets of the banking sector increased by 3,1 percent, the credit portfolio - at one percent. The report also highlights the growth of public confidence in the banking sector, the increase in deposits during the same period at 2.5 percent. Banks attracted foreign borrowing more than paid the obligations. Their liquidity and financial stability maintained at a high level.

Taking into account all these factors, the bank's board considered it appropriate to maintain the rate at a stable level, the rate of percentage and obligatory norms of reserve, as well as the continuation of policy aimed at maintaining a stable exchange rate of manat. During the reporting period, the banking sector preserved stability, bank rates increased, liquidity and capitalization are at stable and satisfactory level.

The banking supervision has the objectives, including enhancing of the capacity of risk management in banks, adaptation to global calls in new conditions, strengthening the monitoring of technological resources, institutional development of the sector and expansion of access to financial services.

During the meeting, they discussed progress in using of countercyclical approach in banking supervision, the introduction of new prudential reporting, improvement of the experience of stress testing, towards the adoption of new regulations on risk management, realization of the second phase of the certification process of banking specialists in risk management, realization of the project to introduce information management system for banking supervision and other projects.

It was recommended to continue measures to implement the policy of effective and efficient bank supervision and maintain the financial stability of the banking sector, including the execution of projects aimed at institutional development.