finance

Taleh Kazimov, governor of the Central Bank of the Republic of Azerbaijan, discusses the central bank’s drive to modernize the banking system and how it supports economic diversification.

Global Finance: How well armored is Azerbaijan’s monetary framework against today’s global risks?

Taleh Kazimov: Azerbaijan is an open, small economy; in 2025, trade turnover reached 79.8% of GDP. Energy prices work through three channels that do not point the same way. Directly, a U.S.$10 rise in the oil price adds roughly U.S.$1.2 billion to the current account, and a U.S.$50 rise per thousand cubic meters of gas, about US$900 million.

The second channel runs the opposite way; around 80% of our non-energy imports come from energy-importing economies, so a 10% oil-price increase raises trading-partner inflation by roughly 0.67%. Here, the nominal effective exchange rate absorbs much of the pressure. The third channel runs through the valuation of strategic assets. Netting the three, the overall effect remains clearly positive.

The framework rests on three pillars.

Exchange rate stability is the key nominal anchor; where trade is the dominant transmission channel, a stable nominal rate neutralizes much imported inflation and expectations stay anchored within our corridor of 4%, plus or minus 2 percentage points. Second, an interest rate corridor with standing facilities ensures policy decisions transmit predictably. Third is the buffer stock; strategic reserves rose U.S.$700 million this year to U.S.$85.8 billion at end-June, exceeding 125% of GDP and covering close to 400% of broad money.

GF: What are your priorities for modernizing the framework?

Kazimov: The objective is unchanged: price stability. Our baseline projects inflation at 6.1% at end-2026 and 5.8% at end-2027: both inside the band, with upside risks on the supply side. The priority is not a change of objective but strengthening and deepening interest rate transmission while preserving exchange rate stability as the primary anchor, with interbank rates as the auxiliary anchor for domestic inflation.

Since September 2022, we have built an active interbank money market from the ground up. AZIR, the overnight unsecured benchmark, has been our secondary operational target for over a year, with the average spread to the policy rate now about four basis points. Last year, the European Bank for Reconstruction and Development issued floating-rate notes referenced directly to AZIR, which is a stronger endorsement.

We have three priorities: strengthening passthrough to market rates; deepening capital and money markets by expanding instruments referenced to AZIR, including the yield curve; and upgrading forecasting through data analytics and AI. I would add a fourth, easily overlooked: communication. Credibility remains a central bank’s most valuable asset.

GF: How would you evaluate the success of the Financial Sector Development Strategy 2024-2026, the central bank’s modernization plan?

Kazimov: We designed the strategy around measurable priorities across every major segment and committed to publishing annual progress reports. That matters as much as the targets, because a strategy whose execution is not measured externally converges on whatever is easiest to accomplish. The execution rate reached 81.8% in 2024 and 85.6% in 2025.

Behind those achievements lies substantive change: reforms aimed at improving transmission through the interest-rate channel, strengthening the stability of the financial sector, modernizing payment infrastructure, fostering digital financial innovations, and introducing a green taxonomy.

GF: Economic diversification away from the energy sector remains a national priority. How is it proceeding?

Kazimov: The six-month data illustrate the composition. The non-oil share remains solid at around 70%. Construction contracted 13% while transport and logistics expanded 8%, information and communication 7.5%, and non-oil industry 4.1%. This is precisely the reallocation we want: activity moving into tradable sectors that earn foreign exchange. During the first six months of the current year, investment in the non-oil sector increased by 5.5%, primarily driven by a 20.8% increase in private-sector investment, which offset a 3.8% decline in public investment.

Monetary policy can support but not deliver diversification. What we can do is provide the conditions: stable prices, a stable exchange rate, a sound banking system, and a market capable of transforming long-term savings into productive investment. Structural reforms on the 2027–2030 economic agenda will determine the pace [of diversification]. Our contribution is to ensure macroeconomic and financial stability.

European CFOs face mounting economic uncertainty, shifting priorities toward cost discipline and resilience.

A Deloitte CFO survey conducted in April showed that 48% of respondents are less optimistic about their companies’ prospects than they were six months earlier. Their pessimism in autumn 2025 was limited to 25%.

Economic uncertainties explain that state of mind: 76% of respondents put energy shocks, inflation, the conflict in the Middle East, and disruption of the supply chain at the top of their risk list.

“CFOs across Europe are entering the second half of 2026 with a noticeably more cautious outlook,” said Richard Muschamp, Deloitte EMEA CFO program leader, attributing their pessimism to “a more challenging operating environment.” EY’s CEO Outlook found similar concerns, with 60% of these respondents citing geopolitical tensions as a near-term risk.

“The real question is, What are you doing about it?” said Myles Corson, EY global finance leader. “CFOs need to build resilience into their organization.” In the short term, that means localizing the supply chain, with a focus on energy security and energy pricing. “Leaders are increasingly prioritizing resilience, productivity and cost discipline over expansion and risk-taking” he said.

According to the Deloitte survey, only 26% of CFOs expect to increase capital expenditures over the next 12 months, and 36% anticipate workforce reduction. Consumer goods sectors, impacted by the slowdown of demand, are at the forefront of the workforce adjustment. Unilever PLC declared a hiring freeze that would last at least three months. In Germany, luxury car maker Porsche AG announced one in five job cuts by 2035, and Deutsche Lufthansa AG said it will eliminate 4,000 white-collar roles by 2030.

In France, executives at the industrial engineering firm Fives Group see no immediate need to downsize. Defense and aeronautic clients, warehouses in need of automatization, industries looking for decarbonization, keep Fives busy. Still “10% of our activities have been impacted,” said Suresh Abye, the finance director. “We are very vigilant about our costs structure. In that sector we stopped recruiting and transferred some employees to different activities.”

Fives has clients in a dozen countries, including France, Germany, Italy, China, Japan, and America. “Compared to America and Asia, Europe is the most impacted by inflation, unemployment, and tepid demand,” added Abye. “The regulatory framework is too laborious and there is no policy favoring local producers.”

Nevertheless, Europe also has a few tricks up its sleeve. Corson highlighted the “quality of its talent pool, the diversity of the market, and its focus on sustainability.”

To take full advantage of these strengths, the EY finance leader suggested maintaining investments in artificial intelligence. “Companies will be able to identify where opportunities are, they will adjust quicker and be able to repurpose their people” said Corson, an eager advocate of cost optimization.

Caroline Crosdale is a contributing writer to Global Finance.  

Investments in instant and cross-border payment systems fuel adoption.

From the start of August to the end of September, the National Bank of Rwanda saw transactions on its eKash instant digital payment system jump from 140,000 to 1 million per month.

The value of transactions also rose sharply, from about $7 million per month to around $1.5 billion per month.

The Rwandan government considered payments a public good and invested in eKash as part of the digital public infrastructure, provided that the new platform ensured a level playing field between mobile money operators and banks, said Soraya Munyana Hakuziyaremye, the Governor of the National Bank of Rwanda, during a Governor Talk at the IMF and World Bank annual meetings in Bangkok. 

eKash Takes Flight

The central bank, taking a page from leading operators of instant payment systems like India’s UPI and Brazil’s PIX, decided to eliminate existing bilateral relationships that mobile money providers had with banks and microfinance institutions and mandated that all person-to-person transactions take place on eKash. It also capped transaction fees at a hundredth of what users might have previously paid.

“For transactions that were above a million [Rwandan] francs [about $679], you could pay up to the equivalent of a $2 fee for a transaction,” Hakuziyaremye said. “Today, the transfer fee is capped at 20 francs, or less than $0.02.”

Without the mandatory routing requirement, she added, the central bank could not have reduced transaction costs. 

To soften the blow the mandate had on the bottom lines of the affected banks, mobile money providers, and microfinance operators, the central bank showed them possible new revenue streams from offerings that leveraged the transaction data collected by eKash.

“They can negotiate with our national switch for the data they need at an aggregated level to offer more lending to their clients, since they have the history of their transactions, and use alternative credit scoring instead of asking for collateral for every single loan they give,” said Hakuziyaremye.

Access to credit remains a major concern for the National Bank of Rwanda, or NBR, as 92% of people have bank or mobile money accounts, but only 20% have access to credit or microcredit. 

“It is still a very huge gap,” she said. “So, tracking the financial health indicators will help us improve the financial well-being of citizens.”

Cross-Border Integration

The East African country is also experiencing rapid advancements in cross-border payment integration at the regional and continental levels.

The NRB is seeing the East African Payment Master Plan, adopted by the East Africa Community, or EAC, in 2025, begin to bear fruit. The central bank launched a pilot that integrates eKash with its eastern neighbor’s Tanzania Instant Payment System, or TIPS.

“We want to use this as a blueprint for a framework to integrate payment systems in the region,” said Hakuziyaremye.

At the same time, the country is part of the Common Market of Eastern and Southern Africa (COMESA), which has its own regional payment system, the COMESA Clearing House.

The NRB is actively integrating its payment systems with the African Continental Free Trade Area’s Pan-African Payment and Settlement System (PAPSS), which seeks to deliver instant payments to beneficiaries in their local currency anywhere in Africa.

When faced with regional cross-border instant payment transactions, NRB agreed to route all of its intra-EAC payments through the regional EAC payment system and to route transactions outside the EAC through PAPSS.

“I believe that this is the approach to take,” she said. “It’s not duplicating the regional payment system, but allows cross-regional payments for regions that already had regional payment systems.”

Rob Daly covers fintech and the economy. Contact him at rdaly@gfmag.com.