Central Bank of Azerbaijan celebrates its 105th anniversary

Baku, September 30, 2024: Today marks the 105th anniversary of the establishment of central banking in Azerbaijan. During these years, the country's central banking has come a long way.

Historical phases of central banking in Azerbaijan

The beginning of an important stage in the financial history of the country is connected with the first democratic republic in the East, the Azerbaijan People’s Republic (APR).

Although the APR was in power for only 23 months, it was able to establish most of the important attributes of statehood. One of the attributes of statehood created by the APR government was the establishment of an independent central bank and the creation of national banknotes.

On March 7, 1919, the government of the APR made a decision on the establishment of the Azerbaijan State Bank (ASB). On September 18, 1919, the Charter of the ASB was approved, and on September 30, its ceremonial opening was held. Despite the difficult conditions under which it operated, the ASB succeeded in issuing national banknotes, one of the most important features of independent statehood and central banking. The first national banknotes were issued in denominations of 10, 25, 50, 100, 250 and 500.

After the collapse of the Azerbaijan People's Republic, the second stage of the history of central banking began with the transformation of the ASB into the Azerbaijan People's Bank by the order of the Finance Commissariat of the USSR dated May 31, 1920. The main task of the People's Bank was to issue banknotes. Central banks had different names and functions in the countries of the USSR. In our country, this function was entrusted to the Azerbaijan Department of the State Bank of the USSR. This department operated from 1936 to 1991.

With the restoration of independence of Azerbaijan, the history of modern development of central banking in the country began. Thus, Article 14 of the Constitutional Law of the Republic of Azerbaijan dated May 25, 1991 "On Grounds for Economic Independence of the Republic of Azerbaijan" entitled "Banking System and Currency Circulation", approved the legal basis of the independent banking system and circulation of the national currency in Azerbaijan, and determined the status and powers of the National Bank of Azerbaijan.

The National Bank of the Republic of Azerbaijan was established by Decree of the President of the Republic of Azerbaijan "On Establishment of the National Bank of the Republic of Azerbaijan" dated February 11, 1992.

The beginning of the National Bank's activity coincided with the period of complex political and economic processes in our republic, the occupation of our lands, power struggles, the threat of the country's disintegration, and a deep socio-economic crisis. During this period, there was hyperinflation and rapid devaluation of people's incomes, the size of the economy shrank by a double-digit percentage every year. Although the manat was introduced in 1992, it was not the only legal tender in the country. The lack of foreign currency reserves made it impossible to ensure the stability of the exchange rate, and as a result, the external value of the manat depreciated rapidly. After the return of the national leader Heydar Aliyev to the political leadership in 1993, stability was ensured in the socio-economic and financial spheres, as well as in all spheres of public life. Having neutralized the forces that were weakening the foundations of statehood, the Great Leader began to implement fundamental reforms aimed at pulling the country out of a deep socio-economic crisis. As a result of these reforms, macroeconomic stability was ensured, unwarranted monetary and credit expansion was prevented, the practice of covering the large budget deficit with emissions was legally stopped, and the manat was declared the sole legal tender in the country. Thus began a turning point in our modern central banking history.

Central Bank of Azerbaijan Today & Tomorrow

Thanks to the successful domestic and foreign policy implemented by the head of the country, Azerbaijan has become a reliable strategic partner of the region. Mr. President has opened a new significant era in the history of our country, marking a historic victory by restoring the sovereignty and territorial integrity of our country. The reforms carried out in accordance with our national priorities serve to strengthen the political and economic authority of our country.

The Central Bank remains committed to its mission of promoting accountability, maintaining integrity and ensuring financial stability through support for development in such a period The Central Bank contributes to the implementation of the country's socio-economic development strategy and to the realization of the national priorities set in the main sectors of the economy. The financial sector acts as the main driving force in the implementation of these priorities. In accordance with the Great Return Program, important steps are being taken to ensure financial accessibility in our occupied lands.

The Central Bank contributes to the implementation of international initiatives supported by our country, creating the necessary infrastructure for the organization of financial sector activities within the framework of sustainable development and promoting the principles of sustainability.

Taking into account the advanced global practices, the Central Bank creates the regulatory and supervisory framework meeting the challenges of the modern era, which contributes to the positive dynamics in the functioning of banking, insurance, capital markets and payment systems. The implemented initiatives are aimed at strengthening public confidence in the financial system. In general, the focus is on expanding financial inclusion by applying innovative technologies and ways to ensure macroeconomic stability in the country, as well as strengthening the resilience of the sector to possible shocks.

As part of its mandate, the Central Bank will continue to implement key initiatives to support economic progress by ensuring financial stability and a sustainable future.