WB: Amendments to Azerbaijan’s banking legislation require changes in ADIF activity
Introduction of the May 7 amendments to the “Law on Banks and Banking Activity” requires making changes to the Azerbaijan Deposit Insurance Fund’s liquidator operations along with strengthening its interconnection and information exchange with the Financial Market Supervisory Authority (FIMSA), Angela Prygozhyna, the World Bank’s (WB) senior financial sector specialist, said.
She said that in February, a joint mission of experts of the WB and the International Association of Deposit Insurers (IADI) assessed the legislation and practices of the deposit guarantee system and the financial stability system, including the mechanisms for cooperation among participants of the financial stability system – FIMSA, ADIF, the Central Bank of Azerbaijan (CBA) and the Ministry of Finance – in line with international principles, and prepared a report with assessments and recommendations.
“We hope that, on the basis of recommendations, ADIF, together with other participants of the financial stability system and with the support of the World Bank, will prepare a reform plan, including legislative changes to strengthen the Fund's mandate, financing procedures in crises and support for the Fund's liquidity, mechanisms and tasks of interaction with other participants of the financial stability system, improvement of internal procedures and others, including the calculation of bank bonuses and payments,” noted Prygozhyna.
In February, the WB launched the second phase of the Financial Sector Modernization project with the support of the Swiss government. The main objectives of the project are to improve the legislative and regulatory environment of the financial sector in line with international standards, and the institutional development of the Financial Market Supervisory Authority.
The project is being implemented in close cooperation with FIMSA, ministries of finance, economy, and justice, ADIF, CBA and other beneficiaries, with the involvement and active exchange of experience and consultations with the private sector.
ADIF has been operating in Azerbaijan since August 13, 2007.
WB talks priority tasks to stabilize Azerbaijan’s financial market
The World Bank is ready to provide the Azerbaijan Deposit Insurance Fund (ADIF) with technical assistance for reforming the ADIF’s activity, Angela Prygozhyna, the WB senior financial sector specialist, said.
The WB has prepared recommendations for ADIF and is ready to provide technical assistance for their implementation, including when preparing amendments to legislative acts, she noted.
Such reforms were carried out in the majority of European countries and on other continents after the global financial crisis of 2007-2008, she added.
“Russia, Ukraine, Belarus and other countries of the region have adopted new legislation to strengthen financial stability, enhance the powers and quality of supervision over financial markets, reform the activity of deposit guarantee funds and minimize the impact of the crisis on the economy and people’s lives by quickly removing insolvent financial institutions from the market with minimal costs,” Prygozhyna said.
These tasks are the priority for stabilization of the financial market, resumption of economic growth and preservation of the quality of life of the population, she noted.
“The WB, within the Financial Sector Modernization Project for Azerbaijan and considering the large-scale, multinational and unique international experience, supports the Azerbaijani authorities in fulfilling these important tasks and provides the necessary analytical support, expert and technical assistance, exchange of knowledge and good practice,” Prygozhyna said.