Monetary and credit policy and reforming banking system
Uzbekistan has established a traditional two-tier banking system, headed by the Central Bank of the Republic Uzbekistan (CBU). Primary functions and tasks of the Central bank are set in the Law on the Central Bank adopted on December 1995. Nowadays CBU is fulfilling the functions of a typical central monetary authority. The main aim of the Central Bank is to maintain stability of the national currency. The Central Bank's major tasks are the following:
working out/implementation of the monetary, credit and foreign exchange policy of the country;
introduction of effective payment system in Uzbekistan;
licensing and regulation of banking and finance activities;
management of the cash service of the public budget jointly with the Ministry of Finance;
management of state reserves of the Republic of Uzbekistan (currency, precious metals, etc.)
The commercial banks system, which is a kind of a component of the Uzbek banking system, for today consists of: about 32 licensed banks. The total number is relatively small, a) in relation to the size of the economy and the population of Uzbekistan, and b) compared with the banking systems in the main neighboring state such as Kazakhstan and the Russian Federation. But this situation is intentional. The political leadership of Uzbekistan has defined a strategic development strategy for the financial and banking sector. Therefore the licensing policy of the Central Bank at present has three main aims:
To create a core group of strong, well capitalized banks, either on the basis of the large specialized state banks of the former USSR or from scratch
To avoid mushrooming growth of small, weak banks existing for their own sake or that of a single major shareholder (pocket-banks)
To attract foreign financial institutions of high quality and reputation to participate in local institutions (joint-venture banks)
Among the commercial banks of Uzbekistan the National...