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Armenian Economy: CBA's Actions Amid Financial Crisis

Explore the influence of the global financial crisis on the Armenian economy and the strategic actions implemented by the Central Bank of Armenia (CBA) to ensure financial stability. This article delves into CBA's interventions in the FX market, enhanced reporting requirements for banks, stress tests, contingency plans, and negotiations with banks' shareholders for capital replenishment. Discover the CBA's cooperation with international bodies like the IMF and World Bank, as well as the introduction of new monetary instruments and lending facilitation measures to support various sectors of the economy. Written by Vakhtang Abrahamyan, a board member of the CBA, this piece reflects on the modern role of central banks in small open economies post the 2008 financial crisis.

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Armenian Economy: CBA's Actions Amid Financial Crisis

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  1. The influence of global financial crisis on Armenian economy and actions taken by theCBA on the way of securing the financial stability Vakhtang Abrahamyan Board member Central Bank of Armenia „The Modern Role of Central Banks in Small Open Economies” June 26-27, 2009 Tbilisi

  2. Actions taken by CBA • Interventions in FX market during 4th Q of 2008 and 1st Q of 2009 • Enhanced reporting requirements have been introduced for banks • Stress tests • Contingency plans • Negotiations with banks’ shareholders for replenishment of capital • Cooperation with IMF, WB .

  3. Monetary instruments (The Central Bank) • The introduction of new repo agreements with 3 month maturity (before that banks have possibility to get funding only for 7 days) • Increasing the volumes of interventions in the secondary market of T-bills and giving possibility to the Government to issue more • The reintroduction of short-term currency swop instruments and in the case of need the introduction of swop instruments with 3 month maturity

  4. Other instruments (The Central Bank) • In the case of capital replenishment by banks’ shareholders, the provision of subordinated debt with 5 year maturity with the same amount of replenishment, • The provision of funding with up to 3 year maturity it the case of banks mergers, with the amount of 30% of the merged capital

  5. Lending facilitation instruments (The Central Bank and the Goverement) • The provision of about $200mln to the banking sector for lending expansion in local currency in the fields of SME, Large businesses, agriculture, mortgages and consumer lending.

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