The Central Bank of Uzbekistan will strengthen control over currency risks and the quality of banks' assets.

The Central Bank of Uzbekistan is tightening reserve requirements and foreign exchange risk management for banks, while simultaneously upgrading their financial reporting to international standards. Central Bank Governor Timur Ishmetov announced this in an interview with the Financial Times.

According to Ishmetov, in recent years, Uzbekistan's economy has increasingly faced external shocks, prompting the regulator to change its approach. Instead of trying to predict the next source of risk, the Central Bank is now focused on improving the overall resilience of the financial system.

"We now live in a world where we must recognize that uncertainty has become the new norm. This forces us to change our policies somewhat," Ishmetov stated.

He noted that after the reforms began, the first few years were devoted to addressing domestic issues, but then came the COVID-19 pandemic and new external crises.

"While previously we focused more on risk management—trying to understand where the next risk might come from and how to protect against it—now we probably need to focus more on resilience," the head of the Central Bank said.

According to him, in the new environment, it's necessary to assume that external risks will constantly arise.

"Instead of trying to understand where the next risk will come from, we need to assume that risks will constantly arise and focus on the economy's ability to withstand them," Ishmetov emphasized.

The head of the Central Bank noted that inflation remains one of the regulator's key tasks. At the same time, external shocks associated with global oil and food prices cannot be mitigated by monetary policy alone.

"This is no longer just about monetary or fiscal policy, but also about the availability of goods themselves: how to ensure supplies, find alternative logistics routes, or, if possible, produce these goods domestically," Timur Ishmetov said.

At the same time, he emphasized that price stability will remain the Central Bank's primary objective.

"If we see upward risks materializing, we must be prepared to respond. But we don't need to immediately react to every global movement. We must be cautious and rely on data," the regulator's head noted.

According to him, if external shocks begin to have a real impact on the Uzbek economy, the Central Bank will be prepared to continue its current tight monetary policy.

Speaking about the stability of the banking sector, Ishmetov reported that capital and liquidity requirements have already been brought into line with international standards.

The next step will be the transition of all bank financial statements to IFRS standards. He noted that this process could reveal problems with assessing the quality of bank assets.

"We will fairly strictly require the formation of sufficient reserves depending on the quality of assets," Ishmetov stated.

The Central Bank is also strengthening oversight of banks' foreign exchange risks, as a more open market simultaneously becomes susceptible to risks.

"We are introducing new regulations for foreign exchange risk management, especially when banks have unhedged positions, and have added new requirements. We are constantly trying to maintain a balance: if we liberalize something and see that it creates new risks, we simultaneously improve and tighten the regulation of these risks," the regulator's head said.

Earlier in the same interview, Ishmetov announced that the Central Bank had prepared a roadmap for further capital account liberalization and intends to implement it in stages due to risks to financial stability and the exchange rate.

He also stated that Uzbekistan plans to complete the liberalization of the remaining administratively regulated prices, including for water and other utilities. Furthermore, the regulator's head called the Central Bank "completely independent" in its decision-making on the key rate and exchange rate and asserted that the government is not pressuring it.