Azerbaijan may apply new regulations on liquidity

The financial stability policy of the Central Bank of Azerbaijan (CBA) in 2012 will focus on continued improvement measures in the banking and risk management in a preventive manner, according to the main directions of monetary and financial stability in 2012, published by CBA on Friday.

"Bringing prudential supervision in accordance with the requirements of the post-crisis period and the latest global challenges will be provided during this goal. The CBA will encourage good behaviour from banks in the face of the current macroeconomic situation and improvements with their financial reserve through oversight mechanisms to increase stability to the risks," the Central Bank said.

Risky positions associated with the asset quality of banks, especially in systemically important banks, as well as liquidity and health measures will remain in the spotlight. The continued activity of the capital in a healthy zone and the expectation level of the coefficient leverage, (the ratio of the level of capital to the bank balance sheet assets and off-balance sheet liabilities), will be ensured.

The CBA will improve prudential supervision in order to achieve the main goals of financial stability and harmonisation with the standards of Basel III. Itwill implement measures for the use of a conservative buffer of capital in the framework of improving the quality and quantity of bank capital, as well as to enhance the role of its stable sources.

The application of new standards for liquidity offered by Basel III standards for better management of short-term liquidity position isn't excluded. At the same time, the CBA will keep the focus on the issue of approaching to international accounting standards to recognise financial losses.


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