Local currency and capital market development in Armenia
The LC2 Initiative enjoyed a remarkably successful year in Armenia during 2016. A reform project initiated in January contributed to the adoption of new derivatives legislation in October. The Bank renewed a Memorandum of Understanding with the government that signals Armenia’s commitment to engage in reforms supporting the use of local currency and the development of domestic capital markets. The signing allows Armenia to benefit from the EBRD SME Local Currency Programme, which seeks to mitigate the exposure of small businesses to exchange rate movements.
Moreover, the EBRD and the Central Bank of Armenia organised a seminar in the capital Yerevan on strengthening the local capital market and increasing local currency lending. The event drew more than 100 participants, including regulators and market representatives.
Ongoing efforts in 2017 will include TC assistance for the development of a local repurchase order agreement, which will increase interbank and money market activities in Armenia. This project is funded by a €55,000 contribution from Japan, part of the €2.35 million it allocated in 2016 for TC projects under the SME Local Currency Programme for the LC2 Initiative in the early transition countries.