EBRD: Azerbaijan enhances financial sector with new derivatives, securitization laws

Azerbaijan has completed the development of legislation regulating the use of financial derivatives and securitization, thereby laying the foundation for improved liquidity and risk management in the capital market.

According to the European Bank for Reconstruction and Development (EBRD), basic criteria have been developed for the legislative framework of green bonds to support environmentally friendly investment projects, promoting sustainable finance, Caliber.Az reports via local media.

These measures underscore Azerbaijan's commitment to integrating international standards and fostering the growth of a sustainable financial system.

EBRD noted that, the Azerbaijani government has implemented special regulations enabling banks to offer investment services, thereby expanding direct access channels for investors.

"The development of capital markets in Azerbaijan has reached a significant stage. In May 2024, Azerbaijan's largest bank by assets, the International Bank of Azerbaijan, announced the country's first-ever Initial Public Offering (IPO). The deal is expected to be completed by the end of the year. The bank is offering a substantial portion of its shares to both domestic and international investors, aiming to diversify its shareholder base and attract additional capital," the EBRD highlighted.

The report also mentioned measures taken by the Central Bank of Azerbaijan (CBA) to strengthen data protection and minimize cyber threats:

"In this regard, the Central Bank has tightened information security requirements in the financial sector in 2024."

As emphasized by the EBRD, the country continues its digitalization efforts while addressing infrastructure limitations, which has led to a 30% increase in internet speed over the past year.

An important step, according to the report's authors, was the government's adoption of its first five-year "Information Security and Cybersecurity Strategy for 2023-2027" in August last year, aimed at creating unified data protection standards and a national digital space.

By Aghakazim Guliyev