Over the current year the Azerbaijani economy continued its dynamic growth. The economy developed in line with forecasted growth indicators, global financial crisis had no effect on fundamental economic grounds of domestic financial stability. Under the new environment, the banking system also posted dynamic growth and stability, banks’ financial intermediation in the economy further developed. Over the year strategic foreign exchange reserves exceeded $17 B, total foreign assets prevailed over liabilities by $9 B, further boosting the creditor position of Azerbaijan in financial relations with the global economy. Strategic foreign exchange reserves provide further rise in Azerbaijan’s international liquidity – they exceed total foreign debt by 1.7 times as much. However, to more reliably protect banking system’s financial stability and preventively neutralize foreign risk factors the National Bank continues preventive policy measures, which cover comprehensive prudential management and high flexibility of liquidity tools oriented towards further strengthening of banking system resilience to external economic crises. Banking system provisioning against potential risks was amplified, management of credit, liquidity and market risks were taken under particular control. These measures allow maintaining and increasing adequate liquidity indicators in the banking system, making banks financially more resilient. As the next step the Management Board of the National Bank decided to shift the refinancing rate to 12% from 15%, the ceiling of the interest rate corridor to 17% from 20% from 14 October 2008. The Board also decided to shift the reserve requirement for banks’ liabilities in manat and foreign currency to 9% from 12%. The reserve requirement on banks’ foreign liabilities was shifted to zero from 5%. Banks will calculate reserve requirements in their statements in line with the new norm from October 16, 2008. The Bank is taking task-oriented efforts to introduce new tools for flexible liquidity regulation, creation of more advanced banks’ refinancing mechanisms and other tools to influence economic dynamics and new techniques to make the banking system more resilient to further strengthen financial stability of the banking system.