On expanding the investor base for notes

17-04-2023

17 April 2023, Baku: In response to the risks observed in the internal and external environment of inflation, the Central Bank continues its anti-inflationary monetary policy. At the same time, the operational framework of monetary policy is constantly being improved in order to increase the possibilities of influencing inflation. The conducted analyses show that in order to effectively regulate the monetary conjuncture and liquidity of the banking system, to further activate the inter-bank money market, to strengthen the influence of the interest corridor on short-term interest rates formed in this market and to establish a short-term yield curve of the manat, it is advisable to continue auctions on placement of CB notes.

The Central Bank has expanded the investor base for notes and changed the terms and conditions for placement of notes to allow the formation of a yield curve for different periods (1/3/6/9 months) by increasing competition in note auctions and to support activity in the short-term money market. It has been decided that in addition to banks, resident commercial legal entities operating in the non-oil and non-governmental sectors (except for legal entities engaged in financial and insurance activities) will be entitled to own notes by applying certain limits. Limits are applied in order to prevent abrupt changes in liquidity of banks and various segments of the securities market. The expansion of the volume of short-term notes will have a positive impact on activity in the securities market by increasing the number of investors.

The Central Bank will constantly analyze the results of expansion of the investor base for notes. Depending on the processes taking place in the money market and achievement of the Central Bank’s monetary policy goals, the terms and conditions for placement of the Central Bank's securities may be revised.