The Central Bank of the Republic of Azerbaijan 

The National Bank of the Republic of Azerbaijan was established by Decree of President of the Republic of Azerbaijan ‘on Establishment of the National Bank of the Republic of Azerbaijan’ dated 11 February 1992.

The National Bank of the Republic of Azerbaijan was renamed as ‘The Central Bank of the Republic of Azerbaijan’ due to entry into force of the Referendum Act of the Republic of Azerbaijan dated 18 March 2009 on ‘Making additions and amendments to the Constitution of the Republic of Azerbaijan’.

The status, goals, functions and authorities, as well as management and organizational structure of the Central Bank of the Republic of Azerbaijan, relations with public authorities and other persons as the central bank of the state are determined by the Law of the Republic of Azerbaijan ‘on the Central Bank of the Republic of Azerbaijan’ (the Law) dated 10 December 2004. The Central Bank’s exceptional function of issue of the national currency of the country is specified in the Constitution of the Republic of Azerbaijan. The Central Bank is also guided by other legislative acts of the Republic of Azerbaijan and international treaties seconded by the Republic of Azerbaijan.

Goals of the Central Bank 

The main goal of the Central Bank is to maintain price stability within its authorities set by the Law.

Without prejudice to the main goal the Central Bank safeguards financial stability within its mandated powers with the laws governing financial markets. 

Profit making is not the main goal of the Central Bank.

Functions of the Central Bank 

The Central Bank discharges the following functions to attain its goals according to Article 5 of the Law:

• Set and implement the monetary and exchange rate policy

The main function of the Central Bank is to set and implement the monetary policy and the exchange rate policy, which is its integral part.

• Organize cash circulation, issue currency to and withdraw from circulation according to Article 19 Part II of the Constitution of the Republic of Azerbaijan

One of the critical functions of the Central Bank is to issue the national currency (manat) of the Republic of Azerbaijan. According to Article 19 of the Constitution of the Republic of Azerbaijan, the Central Bank enjoys this exclusive right. Within this authority the Central Bank issues manat denominated banknotes and coins to and withdraws from circulation, and takes actions on their circulation

• Set and announce an official exchange rate of manat against foreign currencies regularly

The Central Bank sets and announces an official exchange rate of manat against foreign currencies.

• Regulate and control foreign currency according to the Law of the Republic of Azerbaijan on Currency Regulation

Foreign currency regulation and control is a set of measures that support conduction of the exchange rate policy, maintain international settlements, regulate foreign currency circulation, execute transactions, restrict foreign currency use, and exercise government control over foreign currency movement.

• Maintain and manage international gold-foreign exchange reserves

The Central Bank maintains and manages international gold – foreign exchange reserves at its disposal.

• Develop monetary, financial markets and payment systems statistics, the balance of payments, international investment balance and external debt (public and non-public) statistics in accordance with international standards and methodologies, summarize and disseminate data, as well as participate in forecasting the balance of payments of the country

One of the functions of the Central Bank is to develop reporting balance of payments and participate in the development of forecasting balance of payments under the legislation. The Central Bank compiles, summarises and publishes international investment balance and external debt (public and non-public) statistics. 

• Maintain stable, uninterrupted and effective operation of payment systems and support their development

The Central Bank organizes settlements in the national currency between banks, local branches of foreign banks and the national operator of postal communication through correspondent accounts of those institutions with the Central Bank. The Central Bank determines regulations on conduction of payment operations by payment service providers and settlements between them, as well as requirements on payment instruments.

• Ensure stability and sustainability of financial markets, regulate and supervise financial markets and maintain macro prudential regulation and supervision

In order to ensure stability and sustainability of financial markets, the Central Bank shall license, regulate and supervise banks, non-bank credit institutions, professional participants of the insurance market, investment companies and other licensed persons in the securities market, investment funds, investment fund managers, persons engaged in clearing (processing), credit bureaus and other persons identified as the entities supervised by the Central Bank (supervised entities) under the laws regulating financial markets.

• Take actions for the protection of the rights of consumers and investors in financial markets and conduct financial literacy efforts

In order to protect the rights of consumers and investors, the Central Bank carries out test purchase of financial services (products) in accordance with the procedure it has determined, issues obligatory instructions for supervised entities on elimination of violations or the cases that create conditions for violations of legal interests of consumers and investors in financial markets.

• Supervise deposit insurance activities

The Central Bank takes actions to maintain supervision of deposit insurance activities.

The functions of the Central Bank contribute to overall macroeconomic stability.

The powers of the financial markets supervisory authority defined by laws of the Republic of Azerbaijan, including licensing, regulation and supervision in the financial services market, and duties and responsibilities on protection of rights of investors and consumers of financial services were transferred to the Central Bank of the Republic of Azerbaijan with the Decree of the President of the Republic of Azerbaijan on ‘Improvement of the management of the system of regulation and supervision in the financial services market’ dated 28 November 2019.

Relations of the Central Bank with public authorities

The Central Bank is independent in discharge of its responsibilities and exercise of its authorities prescribed by the Constitution and laws of the Republic of Azerbaijan, and no public authority or self-administration body, individuals or legal entities may directly or indirectly for whatever reason contain, illegally influence or interfere with its activities. Although the Central Bank is independent under the legislation, it coordinates its activities with other public authorities and institutions. At the same time, the Central Bank participates in discussions on various directions of the country’s economic policy and issues relevant proposals. As a state bank, the Central Bank services and maintains debit-credit operations on state treasury accounts. The Central Bank may issue loans to the government in case of short-term shortage of funds in the state budget within the limits set by the legislation.

Central Bank accountability 

The Central Bank keeps the broad public informed on discharge of its goals and functions to make its activities more transparent and boost public confidence. Governor of the Central Bank reports to President of the country on the works done to contribute to the economy, as well as on the development of the financial sector. During state budget discussions, Governor of the Central Bank informs the Milli Majlis of the Republic of Azerbaijan on monetary policy guidelines for the year to come. Annual performance of the Central Bank is reviewed by an auditor appointed by President of the Republic of Azerbaijan and financial statements are presented to the President. Central Bank’s annual report goes public – the annual report and audited financial statements are published in media (the Central Bank’s web site) on an annual basis.