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Banking system & supervision
Ensuring a necessary environment for stability, liquidity, solvency, and
the normal functioning of Armenian banking system is one of the key objectives
of the Central Bank of Armenia, CBA (Armenian Law on "The Central
Bank", Article 5). The task of the banking supervision policy of
the Central Bank is to maintain an integral and fluent banking system
in Armenia.
The Central Bank of Armenia is entitled to an exclusive right of supervising
banking activities in Armenia (Armenian Law on "The Banks and Banking",
Article 57).
The Central Bank carries out supervision of commercial banks in compliance
with current Armenian laws and other regulations.
The Central Bank is authorized to:
license the activities of banks (Regulation 1 "Registration and Licensing
of Banks, Foreign Bank Branches, Registration of Branches, Operational
and Representative Offices");
supervise the activities of banks;
determine forms of statements and references and bank reporting to the
CBA (Regulation 3 "Bank Statements, Reporting and Release");
apply sanctions to banks for violation of laws (Armenian Law on "The
Banks and Banking", Chapter 7 and "The Code of Penalties for
Banking Violations");
approve or waive major or more than 50 per cent acquisition in statutory
fund or total capital of the bank;
determine the eligibility criteria for proposed bank management;
set prudential and other economic standards for banking, computation of
such standards (Regulation 2 "Regulation of Banking, Prudential Economic
Standards"), potential loss provisioning ("Classification of
Loans and Receivables and Build-up of Reserves" and "Investment
Securities Loss Reserve Fund"), etc.
The Bank Supervision General Department, an independent structural subdivision
of the CBA, implements banking supervision. The Department incorporates:
On-Site Inspection Department with its 3 units; Off-Site Supervision Department
including unit of Reception of Reports and Documentary Supervision, unit
of Report Review and Risk Control, and unit of Licensing and Bank Register.
The Bank Supervision General Department implements supervision of the
banks before they begin their activities (preliminary approval of obtaining
a license, registration and licensing) (Regulation 1 "Registration
and Licensing of Banks, Foreign Bank Branches, Registration of Branches,
Operational and Representative Offices").
Once a license for banking is granted, the supervision carries on. Banks
submit statements, references to the Off-Site Supervision Department as
required by Regulation 3. Current supervision is implemented by reviewing
such reported data and producing concise weekly, monthly, quarterly, semiannual
and annual reports.
The On-Site Supervision Department conducts regular inspections at banks
pursuant to an inspection schedule prepared by the Department and approved
by the CBA Chairman decree. These can be complex (regular and extra) and
target inspections (Regulation 4 "Implementation of Bank Inspections").
Risks associated with the banking activities are evaluated and managed
based on the results of Off and On-Site supervision (the GAP analysis,
the CAMELS bank rating system, the UBPR bank performance report, passport,
monitoring).
The Registration and Licensing Committee also sits at the CBA. The Committee
deals with issues on:
preliminary approval to, and registration and licensing of, the banks
and foreign bank branches;
registration of the branches, operational and representative offices,
and foreign bank representations;
licensing of other parties;
qualification and professional integrity of bank management (except for
board chairman and department heads of the bank);
granting certificate to bank auditors;
relations arising out of other CBA regulations.
Regulations, procedures relating to the CBA banking supervision and decisions
on individual banks taken by the Central Bank are published in the monthly
"The Central Bank Bulletin", under Armenian laws and other regulations.
The Bank Supervision General Department of the CBA also publishes a report
each year describing the activities carried out during the year ("Banking
System of Armenia: Development, Regulation, Supervision").
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Address: 6 Vazgen Sargsyan street,
375010,Yerevan, Republic of Armenia
Phone 583 841 , 561 554
Fax 523 852
E-mail mcba@cba.am
Telex (684) 243 327 shis am
Teletype 243325/01BHK
S.W.I.F.T.` CBRAAM22
The Dram is the national currency of
the Republic of Armenia. The Central Bank of Armenia is entitled to
an exclusive right of issuing the national currency according to Armenian
Law on "The Central Bank of Armenia", Chapter 6. The CBA organizes
and regulates cash circulation, in Armenia.
The Central Bank:
Issues banknotes and coins, the number of which is calculated estimating
the demand of the economy.
Arranges safe keeping of money in special vaults.
Withdraws cash from circulation through cash service of commercial banks
at the CBA. The CBA carries out cash service through local cash centers
in towns of Vanadzor and Goris.
Regulates proportion of banknotes in circulation.
Regulates cash operations and cash remittances at banks making payments
and transfers for current transactions in the Armenian banks (the CBA
Regulation 9). The Regulation determines also the features of solvency
of Armenian dram.
Replaces and destroys worn-out banknotes.
Besides the banknotes and coins, provided for circulation, the CBA has
exclusive right to issue commemorative coins made of precious metals,
which are legal tender in their nominal value.
The currency of the Republic of Armenia, the dram was introduced on
November 22, 1993 in nominal value 10, 25, 50, 100 and 200 drams. Coins
in nominal value 10, 20, 50 luma and 1, 3, 5, 10 drams were introduced
in 1994 (1 dram equals 100 luma). Banknotes in nominal value 500, 1000
and 5000 drams were introduced in 1994 and 1995. New sample banknotes
in nominal value 50, 100, 500, 1000, 5000 and 20000 drams, which portray
prominent Armenians, were issued in 1998-1999. Recent samples of the
banknotes are featured by higher security.
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