Azerbaijan Holds Off on Introducing Central Bank Digital Currency: What Is Behind This Decision?

Azerbaijan Holds Back on Introducing Central Bank Digital Currency

Azerbaijan, cautiously following global trends, is taking a restrained approach to developing a central bank digital currency (CBDC) due to concerns about potential implications for monetary policy and financial stability. The Central Bank of Azerbaijan currently has no plans to issue a digital currency, but is actively monitoring steps taken by other central banks worldwide.

Decision Based on Observing International Initiatives

The Governor of the central bank, Taleh Kazimov, has shown interest in the technological potential of CBDCs, yet he has emphasized a preference for observing international developments and pilot projects before making a final decision. Kazimov pointed out that no central bank in the world has achieved a “successfully implemented” digital currency yet, as all current initiatives remain in the pilot testing phase.

Analysis of the Impact of CBDC on Monetary Policy and Financial Stability

The Central Bank of Azerbaijan intends to thoroughly examine the impact of a central bank digital currency on monetary policy and financial stability before taking further steps on this matter. Currently, countries such as China with the digital yuan and Russia planning to introduce the digital ruble by July 2025 are actively advancing CBDC technology.

The Issue of the Digital Dollar in the United States

The United States is at a standstill regarding the digital dollar, engaging in debates and analyses that delay a formal approach to this issue. The Republican Party opposes the introduction of a central bank digital currency, advocating for Americans’ rights to conduct financial transactions freely without government supervision and control.

Azerbaijan’s decision mirrors the approach of many countries carefully analyzing the benefits and risks associated with introducing central bank digital currencies. The rapid evolution of financial technologies poses numerous challenges for central banks related to adapting to new standards and ensuring the stability of the financial system.