ABOUT THE CBA
History
Banking System of Armenia in 1991-2009
On September 21, 1991, the all-national referendum proclaimed Armenia as an independent Republic.
In December 1991, the State Bank of the SSRA was charged with responsibility as a National Bank of the newly independent Armenian Republic.
The Armenian Law on "The Central Bank of the Republic of Armenia" adopted in April 27, 1993, renamed the National Bank into the Central Bank of Armenia, governed by Isahak Isahakyan who had been governing the State Bank since 1986.
Until November 1993, money circulation in Armenia used banknotes of the 1961-1992 issue by the Central Bank of the USSR and Russian Federation.
The collapse of the unified Soviet financial system had started yet in 1992. Ukraine, Belarus, Georgia had already put into circulation preliminary samples of currency such as coupons. In May 1993, the Kyrgyz Republic introduced its national currency.
In the summer of 1993 the Soviet ruble, the last symbol of the Soviet Union, slumped. On July 26 the Central Bank of Russian Federation put into circulation rubles of new 1993 issue in its territory. In fact, Russia got out of the Soviet ruble zone leaving the other Republics with a destroyed financial system.
Although some Republics of the former Soviet Union and Russian Federation signed an agreement on creating a common ruble zone in September 1993, and Armenia and Russia signed a bilateral agreement, these were not implemented. Turkmenistan in October 1993, and Uzbekistan and Kazakhstan in November 12-13, 1993 introduced their national currency into circulation. Armenia was the only Republic to keep the Russian ruble in circulation, and the country encountered a danger of unpredictable ruble inflow. In the meantime Armenia was in blockade, energy crisis, military actions were commenced in Nagorny-Karabakh, the economy entered the phase of hyperinflation.
On October 13, 1993, the Resolution of Supreme Council of the Republic of Armenia established a State Commission on Regulation of Money Circulation, aimed at developing and implementing complex measures to regulate money circulation. The Committee's co-chairmen included Tigran Sargsyan, chairman of the Finance, Credit and Budget Committee of the Supreme Council, Isahak Isahakyan, chairman of the Central Bank and Levon Barkhudaryan, minister of Finance of Armenia. Mr. Barkhudaryan was charged with responsibility for situational decisions. The Commission adopted over 20 critical resolutions from October 13 through November 22, 1993.
"The banknotes of the 1993 sample of the Central Bank of Armenia in nominal value 10, 25, 50, 100, 200 and 500 drams are to be legal tender in the territory of the Republic of Armenia effective 12 p.m., November 22, 1993", announced the Commission by the Resolution No. 15, November 19, 1993.
The Dram was put into circulation at ratio 1 Armenian dram to 200 Russian rubles. Rubles of the 1961-1992 issue in nominal value 1-500 remained in circulation. The Commission set the official exchange rate to be USD 1 : AMD 14,5.
At the first briefing after the monetary reform chairman Isahakyan said that the Central Bank would adopt a tight and restrictive policy and that the entire dram stabilization fund would henceforth be in the Central Bank. Initially, the gold and currency reserves of the CBA totaled only USD 500 thousand.
In 1994 Bagrat Asatryan was appointed as chairman of the Central Bank, and held this position until 1998.
In 1994 the Central Bank elaborated the monetary policy program for the first time.
The first fact of forgery (a zero numeral was added to a 10 drams par value banknote to turn it into a 100 drams banknote) was recorded in January 1994.
The coins in nominal value 10, 20, 50 luma and 1, 3, 5, 10 drams of aluminum alloy were put into circulation since January 21, 1994. In this period of time the banknotes in nominal value 1-500 rubles of the 1961-1992 issue of the State Bank of the USSR were withdrawn. In fact, luma had not circulated since its introduction, as on February 21, 1994, one US dollar was exchanged for AMD 244.62.
The banknotes in nominal value 1000 and 5000 drams were put into circulation since October 24, 1994 and September 1995, respectively.
Since 1994 the Central Bank of Armenia has already issued dozens of commemorative coins, including gold, silver and copper-nickel alloy coins.To date, 90 commemorative coins have been issued.
Association of Banks of Armenia was founded on July 27, 1995, and Tigran Sargsyan was elected as President. This organization set an objective to defend interests of the member banks through lobbying. Presently, it is called as Union of Banks of Armenia (Emil Soghomonyan is the President).
On June 31, 1996, the National Assembly adopted Armenian Laws on "The Central Bank", "Banks and Banking", "Bank Bankruptcy", "Bank Secrecy" designed to regulate the relationship in the banking system.
Tigran Sargsyan was appointed as chairman of the Central Bank of Armenia in March 1998 and governed the Central Bank until April 2008.
The banknotes in nominal value 50, 100, 500, 1000, 5000, 20000 drams were put into circulation in period 1998-1999. The banknotes of this series meet modern requirements in terms of security, endurance, quality and design.
The commemorative banknotes of nominal value 50000 drams dedicated to 1700-th anniversary of adoption of Christianity in Armenia were put into circulation in 2001.
The period 2002-2003 was marked by some material amendments and innovations to the banking legislation. Particularly, the Republic of Armenia Law on Credit organizations was adopted on May 29, 2002. Under this law, the Central Bank was empowered with the exclusive function to licensing and oversight operating in Armenia.
In October 2002 some changes and supplements were made to the Republic of Armenia Laws on the Central Bank and on Banks and Banking. These changes vested the Board of the Central Bank with broadened authorities aiming to prevent circulation of illicit preceeds at banks and credit organizations operating in Armenia. Consistent with the legislative amendments, the Central Bank initiated preparation of appropriate normative regulations containing requisite measures and procedures for prevention of circulation of illicit proceeds of crime and terrorism funding at banks, branch officies of foreign banks and credit organizations in Armenia.
In 2002, respective change were made to the Republic of Armenia Law on Licensing. The list of activities subject to licensing included credit organization activities, money remittance, clearing and settlement of payment documents, processing of payments by cards and activities relating to issuance and marketing of payment cards and other documents.The Central Bank is the body to license and oversee the aforementioned types of activities.
In 2004, some other laws were adopted - the Republic of Armenia Law on Collections, on September 28; the Republic of Armenia Law on Payment and Settlement Systems and Payment and Settlement Organizations, the Republic of Armenia Law on Currency Regulation and Currency Control and the Republic of Armenia Law on Guaranty of Remuneration of Bank Deposits of Individuals, all on November 24; and the Republic of Armenia Law on Combating Legalization of Criminal Proceeds and Terrorism Funding, on December 14.
In 2006 in Armenia, a single financial supervision and regulation framework was introduced whereby the Central Bank received a function of regulation and oversight of all financial system participants.
The package of changes to banking laws enabled introduction of the system of corporate governance in the banking sector.This system is being consistently introduced to other financial institutions - insurance companies and investment companies.
To ensure a wider public access to banking activities, the volume of information subject to publication by banks.The banking business made more transparent for shareholders as well.
In the currency legislation, the scope of price quotations, to be made only in Armenian Dram, became wider. The legislation further specified the places where foreign exchange transactions are allowed; it defined the scope of authorities of foreign exchange traders, and stricter requirements for violation of currency legislation were established.
Over 2006 , the legal grounds for switching to a new strategy of inflation targeting were strengthened, thus new provisions were established to make the activities of the Central Bank more transparent.
The legislative amendments on the occurrence of the right of pledge against non-documentary securities were designed to further improve the securities market.
As determined by the Central Bank's strategy, financial area legislation should be gradually aligned with the legislation of the European Union. To this effect , the national Assembly of Armenia endorsed new laws on Insurance and Insurance Activities and Securities Market which include principles, rules, procedures conferred by the EU legislation.
In consideration of protection of consumer rights, the Central Bank has been committed to provide the public with information on financial operations