"We want to make sure we can manage all risks." The head of the Central Bank on further currency reform.
Following the liberalization of the foreign exchange market and the transition to a more flexible exchange rate, the next stage of reforms will be a broader opening of the capital account, stated Central Bank Governor Timur Ishmetov. He stated that the goal is to provide investors with greater freedom while maintaining protective mechanisms.
"We strive to be confident in our ability to manage all risks," said the head of the Central Bank of Uzbekistan, commenting on the upcoming currency reform.
The Central Bank of Uzbekistan is developing an action plan for further liberalization of capital account transactions. This document is currently being coordinated between various agencies and may be published in the future, Central Bank Governor Timur Ishmetov announced in an interview with the Financial Times.
According to Ishmetov, following the liberalization of the foreign exchange market and the transition to a more flexible exchange rate, the next stage of reforms will be the gradual expansion of capital flows. At the same time, the regulator intends to consider potential risks to financial stability and the exchange rate.
"With regard to the capital account, we are pursuing a more cautious approach. [...] The next step will certainly be preparation for broader capital account liberalization," explained Timur Ishmetov.
The head of the Central Bank recalled that almost ten years ago, Uzbekistan began a large-scale economic liberalization process. In the area of currency regulation, he said, restrictions on current account transactions were lifted and free convertibility was ensured.
The exchange rate regime and monetary policy framework have also undergone changes during this period. The Central Bank is gradually moving toward inflation targeting and plans to achieve the 5% inflation target by 2027.
"Probably one of the results of these reforms was that this year the IMF classified our exchange rate regime as freely floating. That is, we now officially have a floating exchange rate regime," the Central Bank Governor stated.
Timur Ishmetov noted that the Central Bank is consulting with the International Monetary Fund on the further opening of the capital account. According to him, the goal is to provide investors with more freedom while maintaining macroeconomic and financial stability.
"We recently prepared a roadmap with a sequence of stages for capital account liberalization. The document is currently undergoing interagency approval. "I hope that after this process is completed, we will publish it so that investors and our community understand what will happen next, and we are transparent about our next steps," he said.
The Central Bank Governor emphasized that before expanding the freedom of capital movement, "the first step must be the creation of strong institutions, protective mechanisms, and a prudent risk management system."
"Because the full and free opening of the capital account can lead to undesirable fluctuations, certain risks, pressure on the exchange rate, and so on. We want to ensure that we can manage all these risks," said Timur Ishmetov.
On August 24, at the Silk Road Finance & Technology Forum in Tashkent, the Central Bank Governor stated that the sum exchange rate will remain flexible and market-oriented.