Azernews.Az

Countries making up the Commonwealth of Independent States may see a severe impact from the global financial crisis unless action is taken soon to alleviate its impact, CIS bankers have warned.
Andrey Kostin, chairman of the CIS Financial and Banking Council (FBC) and of Russia’s major bank VTB, said a reduction in Gross Domestic Product is already predicted in Russia, while banks in Kazakhstan have faced financial losses.
"To prevent other CIS states from becoming infected by this crisis-like epidemic, a CIS analysis center should be set up and collective financing carried out. CIS countries are not insured against crises and losses," Kostin told a conference in Baku last week.
The goal of the two-day conference was to discuss the impact of the financial crisis in world markets on CIS banks and to seek solutions to stabilize local banks. The conference was attended by representatives of 10 banks from eight countries of the former Soviet bloc.
Kostin said one of the key conditions for warding off the crisis was developing new prospective projects which required drafting proposals in cooperation, not by separate CIS states.
He said another priority was providing assistance to those CIS banks that have been most seriously affected by the crisis.
Further, the Council chairman emphasized that CIS states should be cautious regarding the falling rate and influence of the US dollar, which plays a key role in the world's financial system, and work to strengthen their national currencies.
"The global financial crisis has shown that there is a flaw in the world banking system. The reported loss is estimated not in millions, but billions of dollars. Analysts predict that economic growth will slow down in the West and there will be significant staff-cuts in bankrupt companies, while the slowing economy will affect other fields," the banker said.
Anatoli Kazakov, chairman of the FBC's Coordinating Council, said the damage inflicted to CIS banks by the global financial crisis amounted to $1.3 billion. He said close cooperation among CIS states was pivotal to preventing the losses from increasing.
"Among CIS states, Azerbaijan is the country moving the most cautiously and taking the most pre-emptive and preventive measures against the global financial crisis," he said, explaining this conclusion based upon the recent reduction of interest rates by the central bank, regulation of credits, preference to keeping hedge funds in the national currency, manat, and other measures.
"As is seen, the global crisis has had only a minute impact on Azerbaijan's economy and banking system," Kazakov said.
Sergei Lebedev, chairman of the CIS Executive Committee, said in his remarks that an Innovation Fund among the union's member states should be established to prevent the impact of the worldwide crisis from harming CIS banks. He said the current situation showed that the fund was needed to provide assistance and keep the investment climate under control.
"Certainly, it is impossible to develop the banking sector without investment. I believe that to ensure efficient implementation of investment projects, first of all, a relevant financial system should be in place. The Innovation Fund could ensure efficiency of projects by overseeing the financial system."
Lebedev added that among steps to fence off the global financial crisis was forging close cooperation among CIS banks, finance ministries and governments, as well as undertaking joint activities.

'No threat to Azerbaijan'
The global financial crisis will have no substantial impact on Azerbaijan, the central banker has said.
"Azerbaijan's banking system is insured against the crisis," said Elman Rustamov, board chairman of the National Bank of Azerbaijan (NBA). "Azerbaijan, which maintains high economic indicators, has sufficient currency reserves. There is no threat of risk given that the country's financial reserves are twice over its foreign debt."
Rustamov said the Azerbaijani government had chosen the most conservative model in protecting the country's financial reserves. These funds, he said, are being placed in the central banks of the world's leading countries and international financial institutions. The high status of these banks rules out any threat posed to Azerbaijan's reserves.
"Naturally, this model will ultimately cause the profit yield to go down somewhat, but the key goal now is not to secure high profitability of reserves, but to protect and preserve them," the central banker said.
Macro-economic stability reigns in Azerbaijan, and local banks have only been slightly affected by the global crisis. Foreign debt of those banks operating in the country equals only $2 billion.
Rustamov added that if the financial crisis persists, pre-emptive steps being taken would reduce its impact on the country.