BAKU, Azerbaijan, October 4. The Central Bank of Azerbaijan (CBA) has sterilized funds amounting to $2 billion since 2022, the CBA Governor Taleh Kazimov told Global Finance Magazine, Trend reports.
According to Kazimov, Azerbaijan, like many other countries, faced high inflation shocks since mid-2021.
"The nature of the inflation pressures was quite different this time. Since my first days as the chairman of the Central Bank of Azerbaijan at the beginning of 2022, fighting against double-digit annual inflation was a key part of my policy agenda. Our first step was to assess the efficiency of monetary policy," he pointed out.
"Then, we undertook key reforms to improve the linkages between relevant channels of monetary transmission. Our actions aimed to create the necessary infrastructure for the interbank money market, encouraging banks to actively participate in interbank money market operations," the official noted.
Besides, according to him, the CBA introduced standing facility instruments, increased the number and frequency of open market operations and introduced various money market indices for benchmarking.
"We also started to tighten our monetary policy stance. The ratios for the required reserve were raised and differentiated by the liability size of banks. We carried out bill auctions regularly across four different maturities, which also supported the formation of the yield curve for national currency. These operations have led to the sterilization of the money base by $2 billion since the beginning of 2022," he emphasized.
Sterilization is a form of monetary action in which a central bank seeks to limit the effect of inflows and outflows of capital on the money supply. It most frequently involves the purchase or sale of financial assets by a central bank and is designed to offset the effect of foreign exchange intervention.
Kazimov has been governor of the CBA since April 2022.