Central Bank of Armenia (CBA)

Overview

The Central Bank of the Republic of Armenia was established on March 27, 1993, following Armenia's independence from the Soviet Union on September 21, 1991. The National Bank of the Armenian SSR was officially renamed the Central Bank of the Republic of Armenia through the Republic of Armenia Law "On The Central Bank of the Republic of Armenia" adopted in 1993. The Bank operates as Armenia's independent monetary authority and integrated financial supervisor, responsible for implementing monetary and foreign exchange policy, regulating and supervising the banking system, capital markets, insurance sector, and payment systems infrastructure.

The Central Bank of Armenia functions as the sole financial system regulatory authority with comprehensive supervisory powers over banking institutions, non-banking financial institutions (including microfinance and insurance), and capital markets participants.

Current Governor: Martin Galstyan (as of 2024-2025)

Leadership Structure:

• Governor of the Central Bank

• Two Deputy Governors

• Five Board Members

• (All appointed by National Assembly for 6-year terms)

Headquarters: Yerevan, Armenia

Status: Independent integrated financial supervisor with constitutional independence protections

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Integrated Financial Supervision

The Central Bank of Armenia serves as the sole integrated regulator and supervisor of Armenia's financial system:

Banking Supervision

Regulatory Authority:

The Central Bank is the main body responsible for maintaining stability and appropriate functioning of the financial system, including the banking system, through:

• Risk assessment and risk reduction

• Financial system regulation and supervision

• Payment system oversight

• Lender of last resort functions (exceptional circumstances)

• Resolution operations for distressed banks

Supervised Entities:

• Commercial banks and banking groups

• Branches of foreign banks

• Specialized banking institutions

• Credit unions and cooperative banks

• Non-bank credit organizations

Prudential Standards:

• Capital adequacy requirements aligned with Basel III

• Liquidity coverage and net stable funding ratios

• Asset quality and provisioning standards

• Large exposure and concentration limits

• Leverage ratio requirements

Supervisory Framework:

• Risk-based supervision with focus on systemic risks

• Scheduled on-site inspections

• Offsite monitoring and regulatory reporting

• Stress testing and capital adequacy assessment

• Corporate governance and management quality evaluation

• Related-party transaction restrictions

Business Lending Support:

• 20% increase in business lending during 2024 demonstrates CBA's success in promoting credit expansion

• Productive sector support aligned with monetary objectives

• SME credit accessibility initiatives

Securities and Capital Markets Supervision

Regulated Market Participants:

• Securities exchanges and trading systems

• Brokerage companies and investment firms

• Asset management companies and funds

• Securities registrars and custodians

• Investment advisors

• Central depositories and settlement systems

Capital Markets Regulation:

• Licensing of securities firms and intermediaries

• Market conduct and fair dealing requirements

• Prospectus and disclosure standards for public offerings

• Insider dealing and market manipulation prevention

• Portfolio management and custody standards

Insurance Sector Supervision

Insurance Regulation:

• Insurance company licensing and prudential supervision

• Capital adequacy and reserve requirements

• Technical provisions and solvency margins

• Policyholder protection arrangements

• Product approval and disclosure requirements

• Risk management standards

Regulatory Framework:

• "Regulations for the Activity of Insurance Companies in Armenia" - first steps toward comprehensive insurance supervision

• Tightened requirements on insurance company operations

• Risk-based supervision of insurance underwriters

Non-Banking Insurance-Related Activities:

• Brokers and agents regulation

• Reinsurance arrangements oversight

Microfinance and Credit Organization Supervision

Regulatory Authority:

The Central Bank of Armenia regulates and supervises:

• Microfinance institutions

• Credit organizations

• Credit unions

• Pawnshop operations

• Other non-banking financial institutions

Supervisory Approach:

• Risk-based supervision of credit organizations prioritizing:

• Institutions with right to attract loans through public offer

• Systemically important financial institutions

• Large credit providers

Licensing Framework:

• Microfinance organizations licensed as credit organizations or specialized entities

• No separate microfinance regulatory category; regulation through credit organization framework

• Specialized pawnshop licensing

• Conditional licenses for limited-scope operations

Capital and Liquidity Requirements:

• Scaled capital requirements reflecting institution size and risk profile

• Liquidity management for non-bank credit organizations

• Reporting and documentation requirements

Consumer Protection:

• Transparency in lending terms and conditions

• Fair lending practices enforcement

• Customer dispute resolution mechanisms

The Central Bank of Armenia implements comprehensive AML/CFT measures:

Legal Framework:

• Republic of Armenia Law "On Anti-Money Laundering and Counter-Terrorism Financing" (as amended)

• Comprehensive national AML/CFT/CPF system aligned with international standards

• Integration with government counter-terrorism policy

Financial Monitoring Center (FMC):

• Primary role in AML/CFT system

• Collection, analysis, and exchange of financial intelligence

• Suspicious transaction reporting mechanism

• Coordination with law enforcement and intelligence services

CBA Supervisory Role:

• AML/CFT supervision of banking sector

• Customer due diligence requirements for banks

• Beneficial ownership verification and reporting

• Suspicious transaction reporting obligations

• Record-keeping and documentation standards

• Compliance with sanctions programs

Sector Coverage:

• Banking institutions

• Non-bank financial institutions

• Capital markets participants

• Insurance companies

• Money transmission services

• Virtual asset service providers

International Alignment:

• FATF Recommendations compliance

• Mutual evaluation participation

• Cross-border intelligence sharing

• Coordination with foreign AML authorities

System Stability Mandate:

The Central Bank is responsible for maintaining stability and appropriate functioning of the financial system through:

Macroprudential Measures:

• Systemic risk identification and monitoring

• Countercyclical capital buffer implementation

• Sector-specific risk management (real estate, FX exposure)

• Stress testing and scenario analysis

• Banking system interconnectedness monitoring

Lender of Last Resort:

• Emergency liquidity provision to solvent banks in funding distress

• Standing facilities and emergency lending facilities

• Collateral framework for central bank lending

• Systemic stability preservation authority

Banking System Resilience:

• Capital adequacy stress testing

• Liquidity stress scenarios

• Resolution planning and recovery procedures

• Consolidated supervision of banking groups

• Early warning systems for financial distress

Regulatory Powers

Sanctioning Powers:

• Fines and penalties for regulatory violations

• License revocation or suspension authority

• Remedial action requirements

• Cease-and-desist orders for compliance failures

Corrective Actions:

• Mandatory capital injections or restructuring

• Management removal and governance interventions

• Temporary administration authority for distressed institutions

• Market conduct enforcement

Public Disclosure:

• Enforcement action transparency

• Financial stability assessment publication

• Banking system condition reports

Regulatory Role and Function

Legal Foundation

The Central Bank of Armenia operates under comprehensive constitutional and legislative frameworks ensuring independence:

• Constitution of Armenia - Constitutional protection of CBA independence

• Republic of Armenia Law "On The Central Bank of the Republic of Armenia" (adopted 1993, as amended)

• Republic of Armenia Law "On Banks" (banking regulation and supervision)

• Republic of Armenia Law "On Securities Market" (capital markets regulation)

• Republic of Armenia Law "On Insurance Companies" (insurance supervision)

• Republic of Armenia Law "On Anti-Money Laundering and Counter-Terrorism Financing" (comprehensive AML/CFT framework)

• Regulation 18 - Granting permissions for prominently important payment systems

• Regulations for the Activity of Insurance Companies in Armenia

The CBA's independence is constitutionally enshrined, ensuring that monetary policy and financial regulation remain insulated from political or executive interference. The Central Bank's mission centers on maintaining financial system stability, protecting creditors and customers, and implementing effective prudential supervision.

Licensing and Authorization Relevance

The Central Bank of Armenia (CBA) is a key licensing authority in Armenia's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

The Central Bank of Armenia implements inflation-targeting monetary policy:

Policy Framework:

• Inflation targeting with numerical target and tolerance band

• Base rate (policy rate) as primary operational tool

• Loanable funds market coordination

• Dram exchange rate management

Monetary Operations:

• Open market operations for liquidity management

• Standing facilities (deposit and lending facilities)

• Reserve requirement framework for banking system liquidity

• Foreign exchange interventions to manage dram stability

Recent Economic Performance:

• Banking sector assets exceeded country GDP at end of 2024

• Business lending increased 20% during 2024

• Strong credit expansion in private sector

• High economic activity maintained throughout 2024

• Inflation remained below CBA target during 2nd quarter of 2024

Economic Outlook:

• Coordination with Government on macroeconomic policy

• Balance between price stability and sustainable growth

• Financial sector development integration into monetary policy

The Central Bank of Armenia operates and regulates payment system infrastructure:

ArCa Card Network and Processing

ArCa (Armenian Card) System:

• Established March 2000 through collaboration of Central Bank and ten commercial banks with USAID support

• "Armenia Card" CJSC operates the system as network operator

• Prominent importance payment and settlement system under Regulation 18

• Comprehensive coverage connecting banks, ATMs, POS terminals nationwide

System Operations:

• Domestic interbank card payment processing and clearing

• Processing center operations for:

• Local ArCa card transactions

• International card transactions (Visa, Mastercard, American Express, Diners Club, others)

• ATM network for cash withdrawals

• POS terminal networks for merchant payments

• Cost-effective domestic transaction settlement

International Integration:

• Acceptance of international cards (Visa, MasterCard, AmEx, Diners Club)

• Processing and clearing for international payments

• Interoperability with international payment schemes

ArCaPay and Instant Payment System

ArCaPay Initiative:

• Modern instant payment platform developed as part of system modernization

• November 2025: ArCa signed Memorandum of Understanding with Bank of Georgia and Ameriabank

• Interoperability protocol with Georgia's instant transfer system

• Host-to-host connections enabling:

• ArCa card acceptance in Georgia

• Bidirectional instant money transfers between Armenia and Georgia

• Regional payment integration advancement

Instant Payment Capabilities:

• 24/7 payment execution capacity

• Instant fund availability to recipients

• Mobile and digital channel support

• Integration with banking networks

Payment System Regulation and Oversight

CBA Authority:

• Payment system operator licensing and regulation

• Prominently important system designation under Regulation 18

• Operational resilience and security standards

• Participant access and risk management requirements

• Fraud prevention and data protection requirements

Critical Infrastructure Status:

• ArCa designated as prominently important payment and settlement system

• Subject to enhanced regulatory oversight

• Business continuity and disaster recovery requirements

• Cybersecurity and operational resilience standards

Dram Currency:

• Dram as sole legal tender

• Banknote and coin issuance by CBA

• Counterfeiting prevention and currency security

• Cash circulation management

Foreign Exchange Policy:

• Exchange rate stability objective within flexible framework

• Foreign exchange market oversight

• International reserves management

• Cross-border payment facilitation

Exchange Rate Determination:

• Market-based foreign exchange rates

• CBA interventions limited to excess volatility management

• Coordination with government fiscal policy

Payment Systems Governed or Overseen

The CBA operates and/or oversees the national payment and settlement infrastructure of Armenia. Specific systems include:

Relationship to Other Regulators

International Monetary Fund (IMF):

• Member of the International Monetary Fund

• Participation in Article IV consultations

• Technical assistance cooperation on financial sector development

• FSAP (Financial Sector Assessment Program) coordination

World Bank:

• Financial Sector Assessment Program participation

• Technical assistance on supervisory frameworks

• Financial sector development projects

• Capacity building support

Financial Sector Authorities Cooperation:

• Regional central bank coordination

• Bilateral relationships with other financial regulators

• Cross-border supervision coordination

• Information exchange agreements

International Association of Currency Affairs (IACA):

• Membership reflecting international standing

• Participation in central bank coordination

CIS Cooperation:

• Regional financial system cooperation

• Payment system coordination within Commonwealth of Independent States

• Currency arrangement cooperation

• Capital flow management coordination

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Headquarters:

• Central Bank of Armenia

• Address: Yerevan, Republic of Armenia

• Website: https://www.cba.am/en/

Governor's Office:

• Martin Galstyan, Governor

• Official correspondence through main website

Regulatory Divisions:

• Banking Supervision Department

• Securities Market Regulation

• Payment Systems Oversight

• Insurance Supervision

• AML/CFT Supervision

• Microfinance and Non-Bank Credit Organizations Regulation

Board Members:

• Leadership structure available on official website

• Appointment information from National Assembly records

Notes on Naming and Language