CBA: Balances on correspondent accounts of banks to act as benchmark for money supply

Balances on banks’ correspondent accounts in the Central Bank of Azerbaijan (CBA) will act like a benchmark to influence the money supply, reads a statement by CBA “On the main directions of monetary policy and policy to maintain financial stability for 2022,” Report informs.

“The money supply, which is another intermediate goal of monetary policy, will be regulated taking into account the economy’s demand for money, the forecast of economic growth and inflation. Changes in the structure of the money supply under the influence of digitalization processes will also be taken into account when regulating the money offering,” reads the statement.

Oil prices projected next year, the dynamics of growth in non-oil exports, and as a result, a surplus balance of payments and an increase in transfers from the State Oil Fund of Azerbaijan to the state budget will maintain exchange rate stability, which is the main anchor of price stability, ensuring a balance in the foreign exchange market, the CBA reports.

The statement also notes that maintaining a balance in the foreign exchange market will actualize the acceleration of reforms in the direction of diversifying sources of foreign exchange earnings for the next year and the medium term.

“In 2022, the CBA will adequately use all the tools and mechanisms in its disposal. Decisions will be made promptly, based on the liquidity of the banking system. The assessment of the structural surplus (or deficit) of the banking system will continue,” the statement said.