Increase of CBA authorized capital aims reforming banking sector?

Increase of CBA authorized capital aims reforming banking sector?

A decision to increase the authorized capital of the Central Bank of Azerbaijan is expected to raise its liquidity.
President Ilham Aliyev issued on November 25 a decree to approve the amendments to the law ‘On the Central Bank of Azerbaijan’ for increasing the bank’s authorized capital from current 10 million manats to 500 million manats.

Increase of the bank’s authorized capital is part of reforms in the banking sector of the country, Vugar Bayramov believes.
The chairman of Centre for Economic and Social Development told Azernews that increase of the authorized capital of the CBA will allow the bank to become more liquid,i.e to raise its financial liquidity.

The decree says that the bank’s capital is formed by the authorized capital and capital reserves. The capital reserves should not be less than the authorized capital of the CBA and are formed by deductions from the profit of the fiscal year.

In accordance with the decree, the Cabinet of Ministers was instructed to draft proposals within three days on bringing the legislation, the presidential acts and the legal acts of the Cabinet of Ministers into line with the amendments to the law ‘On the Central Bank of Azerbaijan’.

The Cabinet of Ministers will control the process of bringing the legal acts of the executive authorities in accordance with this law and inform the president about the execution of this task within five months.
The presidential decree to increase the authorized capital of the CBA was expected, as the law on the CBA was amended in April this year. Then increasing the authorized capital of the CBA was regarded as one of the main goals.

Bayramov believes that after increasing the authorized capital, the CBA will be able to enhance its access to foreign markets, which, in turn, will pave the way for the CBA to be more active in the financial markets.

“At the same time increase of the authorized capital is of great importance in terms of increasing confidence in the CBA. This will enable to increase the financial resources of the bank, and confidence in the CBA in the banking sector of the country,” he added.

Growing confidence in the CBA is expected to pave the way for increasing its maneuverability, and the CBA will enjoy a chance to support commercial banks more closely by using additional levers.

Aynur Karimova

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