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Nazrin Abdul

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Azerbaijan has ranked first among CAREC (Central Asia Regional Economic Cooperation) countries in terms of institutional and regulatory capacity and second after China in technological indicators for capital market and fintech development.

As reported by Azernews, the ranking is based on a report by the Asian Development Bank (ADB).

The report highlights that these results demonstrate Azerbaijan’s strong potential to accelerate capital market development in the short term, supported by its growing fintech capabilities as well as well-developed regulatory and business frameworks.

“Fintech can be leveraged to modernize traditional capital markets and introduce alternative financing platforms,” the ADB report emphasizes.

ADB analysts believe that by fully utilizing its strengths in technological and institutional indicators, Azerbaijan could assume a leading role in capital market development across the CAREC region.

The report identifies several areas where Azerbaijan could demonstrate regional leadership, including the establishment of a regional regulatory sandbox, the creation of a joint fintech ecosystem, the harmonization of digital identification regulations, and the development of cross-border payments through the use of distributed ledger technologies (DLT) and similar solutions.

According to the ADB, deeper regional cooperation is essential to accelerate capital market development within the CAREC region.

The bank concludes that this approach represents the most effective strategy for advancing regional financial integration, as it contributes to the creation of deeper and more liquid capital markets, enabling companies to access the most efficient financing sources while offering investors more attractive investment opportunities. Regional cooperation is also crucial for managing the risks associated with financial globalization and integration.

The report notes that capital market development remains a complex and long-term challenge, requiring consistent policy efforts across multiple areas. While fintech and regional cooperation can help advance this objective, structural and objective constraints are expected to slow the pace of tangible change.

“In this context, regulators should adhere to a phased and strategic approach based on a comprehensive and carefully structured plan, the implementation of which may take 10 years in some countries and up to 20 years in certain cases,” the ADB report states.