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Armenian judiciary and banks need education on ISDA rules for a better capital market in the country, Mr Mark Davis, head of the EBRD Yerevan Office, told Armenian News – NEWS.am.

Currently, the EBRD is working on a roadmap for money markets in the region. The study contains an annex on Armenia. 

In early August, the EBRD ran a workshop with the Central Bank of Armenia (CBA) before an audience of finance professionals. The workshop focused on policy moves necessary to advance the capital and money market.

“The EBRD absolutely has interest in participating in these local markets, with interest rate swaps, exchange rate hedging instruments, and others”, Davis said.

But this requires a sound regulatory legal framework, and a trained judiciary, which will be able to treat financial contracts in a way to encourage investment.

Another task is harmonization of transactions between market participants (a bank and a bank, or a bank and a nonbanking institution). The No 1 reference point is the standard by the International Swaps and Derivatives Association (ISDA).

The ISDA GMRA standard is a very complicated one. Even a short version holds around 150 pages of legal documentation.

“Technical assistance on this takes time. We’re going to be working on tis, but this is no quick solution. This may take several years, but this is a very important endeavor”, Davis said.

The bank looks forward to helping to create liquidity in the market and working with partners such as the International Finance Corporation, the Eurasian development Bank, and others. 

Local demand for financial products is surely there, because the pension reform will accumulate retirement savings, and pension management funds will keep looking for obligations and derivatives, and other instruments.

The Armenian government has done an impressive work in designing a new system and introducing prudential regulations for its participants, Mr Davis added.

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