Regulatory AlertsRegulation on Market Risk Management in Banks
The Central Bank of the Republic of Azerbaijan issued Decision 45/1 to establish minimum requirements for market risk management in banks and foreign bank branches. The regulation mandates comprehensive governance structures, standardized measurement methodologies including interest rate risk in the banking book via economic value of equity and income-based methods, and rigorous stress testing to quantify potential losses against capital adequacy. Banks must implement continuous monitoring, independently validate risk models, and submit quarterly electronic reports to the Central Bank to ensure compliance with defined limits.
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