BAKU, Azerbaijan, Nov. 13
By Fakhri Vakilov-Trend:
Uzbekistan’s President Shavkat Mirziyoyev signed a new version of the law “On the Central Bank”, which entered into force on Nov. 13, Trend reports citing the press service of Uzbekistan’s Central Bank.
The new version of the law was developed taking into account the need to ensure and maintain the price stability in the economy, the stability of the banking system and the functioning of payment systems by the Central Bank.
The law consists of 11 chapters and 72 articles. The new edition was developed jointly with experts from the International Monetary Fund (IMF) and included “best practices and experience of foreign central banks”, in particular, Russia, Switzerland, Poland and Georgia.
The functions of the Central Bank of Uzbekistan are to develop and implement an effective monetary policy, monitor, analyze and forecast inflation, generate and publish banking, monetary information and statistics on the external sector, including the balance of payments, international investment position, and external debt and reserve assets of Uzbekistan.
According to the new version of the law, the bank’s board determines and approves the main directions of monetary policy for the coming year, including the parameters for the provision and withdrawal of liquidity, interest rates on monetary operations of the Central Bank, including its basic rate, the size of mandatory reserve requirements, the list of types of collateral for loans issued determines for systemically important banks the permissible values of prudential ratios and other powers.
In addition, the law provides for foreign exchange interventions in the domestic foreign exchange market only to the extent that they can eliminate excessive currency fluctuations provided that the free-floating exchange rate regime is maintained.
The press service reports that one of the main innovations in the law is the communication of the Central Bank with the public. To increase the effectiveness of monetary policy to ensure price and financial stability, the law enshrines an active communication policy that aims to increase the transparency of the Central Bank, and thereby the level of confidence in it from the population and economic agents. This, according to the Central Bank, is the key to successful management of inflation and inflation expectations in the economy.
Moreover, the new version of the law provides for the creation of an internal audit service as an internal audit body, whose responsibilities include verifying the economic and financial activities of structural units and subordinate organizations of the Central Bank, as well as conducting annual audit by audit organizations in accordance with international audit standards.
In accordance with IMF recommendations, the Central Bank’s list of powers includes motivated judgment in licensing, regulating and supervising the activities of banks and non-bank credit organizations and organizations for the refinancing of mortgages and banking groups, as well as activities in the spot and forward financial markets with an expanded line of market instruments, currencies and precious metals.
Unlike the previous law, adopted in 1995, the new version was developed taking into account the need to ensure and maintain the Central Bank's price stability in the economy, the stability of the banking system and the functioning of payment systems.
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