Central Bank of Azerbaijan plans to introduce Net Stable Funding Ratio for banks

BAKU. Oct 7 (Interfax) - The Central Bank of Azerbaijan (CBA) plans to introduce a new prudential standard in the country - the Net Stable Funding Ratio (NSFR), CBA General Director Shahin Mahmudzade said at a briefing on Tuesday.

A corresponding concept is currently being developed, Mahmudzade said. "The application of the NSFR ratio [provided for by the Basel III standards] is also aimed at regulating the long-term liquidity of the banking sector," he said.

However, he did not specify the timeline for implementing this standard.

The introduction of the NSFR standard is aimed at encouraging banks to rely on more stable and long-term funding sources, reducing dependence on short-term financing. This will balance their assets and liabilities by maturity and will help reduce one of the systemic risks to financial stability associated with short-term funding.