CBA will determine its policy by optimal combination of dynamics and stability

Business Materials 22 October 2010 10:36 (UTC +04:00)

Azerbaijan, Baku, Oct. 22 / Trend I.Khalilova /

The integration into the global economy will remain the main direction of the policy of the Central Bank of Azerbaijan (CBA) in the coming years, CBA Research and Development Center Director Emin Huseynov said.

"Meanwhile, the banking system should not allow excessive risk-taking, contributing to a positive impact on the economy and maintaining reliability of the system," Huseynov said. "In other words, the policy of the CBA will be determined by the optimal combination of dynamics and stability, much more reflecting the level of macroeconomic risks."

The global financial crisis, he said, has become a serious challenge for macroeconomic policy in many countries. Realizing the importance of this issue, the CBA is conducting a proactive work on adapting the mechanisms of monetary policy and macro-prudential supervision for new challenges after the crisis of the monetary management system.

"The crisis showed the failure of application of the inflation factor in the monetary policy, so it is necessary to address issues of including a broad set of goals into the counter-cyclical macroeconomic policies and defining special individual regulatory tools for each target," Huseynov said.

Huseynov said the target parameters should be included, at least the following areas: target for inflation, investment external demand, stability system, degree of growth and the overheated financial sector.

The targeting system may also include curbing of the general price level in the economy, including also asset prices. Issues of systemic stability and prevention of overheating of the financial market involve the use of countercyclical regulatory mechanisms.

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