BAKU, Azerbaijan, February 17. Azerbaijan's Central Bank is focusing on bringing open finance infrastructure, said Taleh Kazimov, chairman of the Central Bank of Azerbaijan, Trend reports.
He was addressing the panel discussion on Resilience of the Financial System in Emerging Markets held as part of the AlUla Conference for Emerging Market Economies, organized by the Ministry of Finance of Saudi Arabia and the IMF Regional Office in Riyadh.
"Financial inclusion is one of the priority topics all over the world, particularly in emerging markets, and particularly in Azerbaijan. In Azerbaijan, we have 70% of the adult population that are holding a banking account, which is quite a good achievement for a very short period of time. But there are some figures which create some challenges for the Central Bank, particularly for monetary policy, financial stability," he said.
Kazimov noted that the banking assets to GDP ratio is 42%.
"It means that the economy is unbanked. But it also means that there is a huge potential for growth. Banking sector holds around 95% of all the financial sector. Second, which creates challenges for monetary policy, is M0 is 43% of M2. It means that we have quite a big amount of cash in circulation," said the chairman of Azerbaijan's Central Bank.
He went on to add that Azerbaijan's Central Bank is definitely focusing on supply side, advancing the regulation.
"Second, we're working on developing the infrastructure. We have introduced instant payment system locally, open banking. Azerbaijan's Central Bank is in charge for supervision and regulation of the banking, insurance, capital market, payments. Also we are in charge for development of fintech. Having this mandate, we are focusing on bringing the open finance infrastructure, which will provide all the market participants with open banking, open insurance, capital markets, and of course, fintechs. One of the infrastructure projects which we have started this year is to bring in the eKYC solution. That will make the entrance to the financial sector much easier, particularly for the startups in the fintech side. But that's on supply side. On demand, we are working on increasing the financial literacy. Of course, we are doing targeted programs in this direction," said Kazimov.
He pointed out that Azerbaijan has stable currency regime for eight years.
"In September 2022, we launched totally new monetary policy with new operational framework. For 2024, we achieved 43% growth in unique individual term deposits. It's quite big jump in one year, as we brought competition on liability side of financial sector. We have renewed our compulsory non-life insurance products, and we have 100% penetration. So we're using digital channels to increase the penetration. So for third-party liability insurance, particularly in CASCO, we have 100% penetration. We are going to do this year the same for real estate compulsory insurance, which covers the catastrophic risks," he said.