17:44 - 18.07.2025

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July 18, Fineko/abc.az. The Central Bank of Azerbaijan (CBA) will begin phased application of the liquidity coverage ratio (LCR) within Basel III from August 1, 2025.

ABC.AZ reports that Moody's rating agency stated that this regulation provides for the storage of high-quality liquid assets of banks in the required volume in both national and common currencies. The full application will be completed by the end of 2027.

The new structure is positively assessed in terms of credit ratings and is expected to enhance the financial stability of the banking sector. The Agency believes these changes will strengthen the guarantees of stable liquidity in the manat.

According to the CBA, the share of liquid assets in manats increased from 46% in 2020 to 56% at the end of 2024.

Under the new rules, systemically important banks must provide LCR in manats at the level of 50% from August 2025, and at the level of 100% in June 2027. Other banks should gradually reach 40% in 2025 and 100% in December 2027.

Both the national and general LCR will be calculated separately, and banks will provide this information to the CBA on a daily basis.

In accordance with the rules, HQLA will also include precious metals, government guaranteed assets and other eligible assets. This is aimed at supporting banks' liquidity, particularly in unstable times.

The CBA states that all banks currently comply with current LCR regulations. The average indicator for the sector is 150% in manats and 178% in foreign currency.

"This shows that banks have strong liquidity buffers and are ready for new demands," Moody's notes.