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 legal 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 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.
The Central Bank’s goals also include to organize and ensure operations of centralized interbank and other unlicensed payment systems, as well as support the stability of the banking system.
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:
conduct the monetary and foreign exchange policy
The Central Bank’s main function is to set and conduct the country’s monetary and exchange rate policy.
organize cash circulation
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 an official exchange rate of manat
The Central Bank sets and announces an official exchange rate of manat against foreign currencies.
regulate and control foreign currency
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.
manage gold – foreign exchange reserves
The Central Bank maintains and manages international gold – foreign exchange reserves at its disposal.
develop the balance of payments
One of the functions of the Central Bank is to collect the country’s balance of payments statistics and compile a reporting balance of payments.
develop the country’s consolidated (both public and non-public) foreign debt statistics and international investment balance
The Central Bank develops the country’s consolidated (both public and non-public) foreign debt statistics and international investment balance, summarizes and disseminates data. This function was assigned to the Central Bank on the basis of the changes made to the Law of the Republic of Azerbaijan on the Central Bank of the Republic of Azerbaijan dated 20 October 2015.
organize and regulate payment systems
The Central Bank organizes, coordinates, regulates activities of and oversees centralized interbank and other unlicensed payment systems as part of this function.
The functions of the Central Bank contribute to overall macroeconomic stability.
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 shortfall of funds in the state budget by purchasing debt securities issued by the Azerbaijani Government.
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 country economy, as well as the financial sector. During state budget discussions the Central Bank Governor informs the Milli Majlis of the Republic of Azerbaijan on main directions of the monetary policy 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.
