Trade banks started to work by permission of Russian Gosbank in 1991. They had been founded by state organs. As field of activity, giving credits to industry, special sector and small enterprises. In this area Azakbank and Ilkbank were famous. Important point is that these banks had a speciality as authority to foreign currency regulations.
Azerbaijan declared Manat as national monetary in 1994 and founded Baku Interbanks Foreign Currency Market to regulate foreign currency activities in country. Azerbaijan decided to increase flow of Manat activities. Early time government used ruble as minor rate by giving them from Russian Central Bank. But this function as 4 billiard Ruble was inefficient to pay salaries and fees. So government decided to create a mechanism for regulating Manat and foreign currency. Firstly Manat had been published as 1, 10 and 250 Manat banknotes and gave to common market with ruble.
In that time official foreign currency values was determined accordingly values of Moscow Interbank. But market foreign currency values was determined by Azerbaijan International Bank. So there are two value lines in market.
Additionally, trade firms decided values according to their agreements.
On the other hand, fourth value borned in foreign exchange in free market.
National Bank of Azerbaijan defined rates of authoritative banks to declare Manat and ruble exchange rate. So 16 monetary values of other countries had been agreed as convertible by International Bank. (Turkish Lira, American Dolar, German Mark, Norway Cron…)
According to decides of Baku Interbanks Foreign Currency, International Bank and other banks which have a right to determine foreign currency are in common market. Law regulated that any external body can not decide and activite in foreign currency. So illegal and other mix functions came to an end.
Since 1995 these banks can determine rate of foreign currency. Main actor National Bank declares buy and sell of foreign currency on second day of every week. Also National Bank keeps stability every year according to situations of state.
National Bank have an obligation as save and administration of foreign currency reserves of state. In a time, functions of National Bank and International Bank united to stabilize Manat. But after law declared a point as all corporations should give % 30 profits which are gaining foreign currency to Interbanks Foreign Currency. So National Bank is a unique unit to save and stabilize foreign currency reserves.
National Bank can give a right to some special banks for foreign currency transaction. These banks can activite in transfer of foreign currency.
Mehmet Fatih ÖZTARSU
Qafqaz University – Interes Club
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