18:14 - 2.03.2020

---

March 2, Fineko/abc.az. Economist expert Samir Aliyev expressed concern about the completion of the term of full deposit insurance.

ABC.AZ reports that the expert stated that the decision to insure fully the deposits was aimed at reducing the impact of the devaluation decision made in 2015 on the banking sector and restoring public confidence in the banking sector.

According to Aliyev, the decision was very correct. The government may not have a final decision on extending the deadline today. But, in my opinion, the government should not hesitate whether to extend the term by another one year. This will significantly reduce the psychological stress for depositors and eliminate the fear of banks in connection with the leakage of deposits:

"According to Central Bank’s latest data, as of 1 February 2020 the deposits at banks total AZN 8.6 bn. 75.6% of those deposits are short-term.

This means that the population is not fully confident in the stability of banks and the stability of the national currency. 34% of deposits are current accounts. This means that a deposit of AZN 2.9 bn can be withdrawn from banks at any time and collapse them. Unfortunately, the Deposit Insurance Fund operates in secret, and there is usually no statistical information on its website. We don’t know, for example, what part of deposits is up to 30,000, 50,000, 100,000 manats. If you have these and other data, you can more accurately assess the real situation. In fact, there are many questions. What is the share of deposits in the amount of millions? Or, if the government does not extend the deadline tomorrow, what will be the behavior of depositors, especially of those depositors whose bank deposits reach hundreds and millions manats?

Taking all this into account, the government should extend the term of full deposit insurance by another year. Perhaps the early parliamentary elections also had negative impact on the government's decision. As it is technically impossible to make a decision to extend the term before the new parliamentarians start working. But if the project is ready, then a decision on deposit insurance can be made at the first meeting. For this, the government must publish its position on the extension of the term, so that the population would not worry. If there is no intention to extend the term, then it is necessary to make changes to the insurance mechanism. It should increase the amount of compensation to at least 100,000 manats," the expert emphasized.