Azerbaijan carried out bill auctions regularly across four different maturities, which also supported the formation of the yield curve for national currency and these operations have led to the sterilization of the money base by $2 billion dollars since the beginning of 2022, Taleh Kazimov, governor of the central bank of Azerbaijan, told Global Finance.
According to him, Azerbaijan, like many other countries in the world, faced high inflation shocks since mid-2021: "It is important to say that the nature of the inflation pressures was quite different this time. Since my first days as the chairman of the Central Bank of Azerbaijan at the beginning of 2022, fighting against double-digit annual inflation was a key part of my policy agenda. Our first step was to assess the efficiency of monetary policy. Then, we undertook key reforms to improve the linkages between relevant channels of monetary transmission.
"Our actions aimed to create the necessary infrastructure for the interbank money market, encouraging banks to actively participate in interbank money market operations. We introduced standing facility instruments, increased the number and frequency of open market operations and introduced various money market indices for benchmarking. We also started to tighten our monetary policy stance. The ratios for the required reserve were raised and differentiated by the liability size of banks."