Martin Galstyan: In the face of more frequent, powerful and  unpredictable shocks, it is necessary to confidently ensure  macro-stability, price stability and uninterrupted financial system

ArmInfo. Martin Galstyan as a candidate for the post of chairman of the Central Bank of Armenia delivered his first speech at the National Assembly of the Republic  of Armenia. Galstyan's candidacy was proposed by the ruling "My Step"  faction.  In his speech, he emphasized that today's reality is  unprecedented in the modern era of the history of mankind. The  governments of all countries, as noted by Galstyan, today are doing  everything possible to save lives, not stopping at huge economic  losses.

<Because of the coronavirus pandemic, much has changed in the world.  We often hear the expression <martial law>, <the world will not be  the same>. Many economists say that the economic downturn will be  deeper than during the global financial and economic crisis of  2008-2009. From the point of view of the formation of economic  policy, there are great difficulties, primarily due to health care  and the associated uncertainty. It is noteworthy that economists  agreed on overcoming the crisis and the directions of economic  policy. The main appeal is: "React quickly and do everything  possible," he said.  Galstyan recalled that in connection with the  situation, the Central Bank at the beginning of March at a meeting  with bankers discussed possible directions of development of the  situation related to the deterioration of creditworthiness of  borrowers, and urged market participants to take an individual  approach, postponing payments on loan obligations. According to the  agreement, the Central Bank also eased the regulatory regime of  financial institutions, while at the same time delaying by 6 months  payments on current mortgage loans provided under international  programs.

In addition, banks and credit companies were given the opportunity to  revise the terms of lending to individuals and legal entities in such  a way as not to spoil their credit histories in the current reality,  and to exclude an increase in the credit burden.  At the same time,  Galstyan recalled that on March 17, the Council of the Central Bank  decided to lower the refinancing rate (by 0.25 percentage points to  5.25% - Ed. note), And this was a well-thought-out decision under the  circumstances. "Many of our regional partners did not take such a  step, in particular Russia and Georgia, while Kazakhstan was forced,  on the contrary, to increase the refinancing rate," Martin Galstyan  recalled.  The next step of the Central Bank, he said, was aimed at  maintaining stability of the financial market. The regulator  announced and provided the necessary amount of liquidity, both in  drams and in foreign currency. <At the moment, the system does not  have liquidity problems and operates in normal mode>, he stressed.   The candidate for the post of head of the Central Bank said that they  are considering the possibility of reducing by 1 percentage point the  capital adequacy ratio for banks (the current standard N1 is min 12%  - Ed.note), and extending the implementation of new liquidity Basel  standards until January 1, 2021 ( standards N2 / 1 and N2 / 2 are  currently in force - min 15% and 60% respectively - Ed. note).

Galstyan recalled that international financial organizations in  particular, the International Monetary Fund positively evaluate the  steps taken by the CBA,. In this regard, Galstyan emphasized that,  guided by the statement of the IMF, we can talk about the consonance  of the actions of the Regulator with the current situation, while  realizing the degree of uncertainty. "It is for this reason that we  are analyzing the scenarios and are at the operational management  stage in order to be as prepared as possible for any changes and  developments in the situation," Galstyan emphasized.  Not only in a  stressful situation, but in general, the Central Bank is guided by  the principle of ensuring long-term public welfare, Galstyan added.  <The difficulties that the Central Bank has encountered in the  history of its activity have only hardened us, strengthening our  firmness of intentions, and at the same time maintaining freedom and  openness to new, bolder ideas. The Central Bank as a structure acts  as the most important regional partner for reputable international  organizations>, he stated.  Speaking about future steps, Martin  Galstyan emphasized that in parallel with changing challenges, the  process of developing and applying the needed steps will be more  complicated. <Building a bridge of trust is the only guarantee that  we will continue to have effective and predictable policies for  beneficiaries, and the trust of citizens and partners in the national  currency will increase even more. I believe that the most important  criterion for the effectiveness of monetary policy is public  confidence. Only in this case it is possible to effectively manage  the inflationary expectations of the public, which is the basis of  monetary policy>, he said. According to Galstyan, the main guarantee  of increasing confidence is a gradual increase in the transparency of  the policy. In this context, he emphasized the importance of dialogue  with the public and the professional community regarding guided  policies, which provides for the implementation of a new  communication strategy. 

<Our financial system has been developing dynamically in recent  years. It is necessary to work towards balanced and differentiated  growth, increasing the capabilities of the financial market and  expanding the range of tools. At the same time, for the development  and growth of the system it is necessary to introduce the best  international experience, assess possible risks and take appropriate  steps to manage them. In this regard, the importance of pursuing a  correct and balanced policy in the context of regional and  international uncertainty is growing, "the candidate for the post of  CBA chairman said.  Galstyan also touched on the issue of financial  literacy of the population. He emphasized: <The most important  element of responsible lending are such decisions by the people that  are consonant with their financial flows. I believe that an effective  policy lies not in limiting financial opportunities, but having  public with a high level of financial literacy who is able to make  deliberate decisions. There is plenty of work in this direction, and  the Central Bank, together with partners, including members of the  National Assembly of the Republic of Armenia, will continue to  implement effective programs in this direction>.

According to the candidate for the post of head of the Central Bank  of the Republic of Armenia, the use of innovative technologies is  also extremely important. <The integration of new technologies will  allow us to raise to a new level a culture of decision-making based  on facts. The challenges of the 21st century will most often come  from the cyber environment, and I think that the introduction of a  modern cybersecurity strategy is a prerequisite.  However, we must  understand that the nature of problems can change, and then the key  to their solution will be the ability to look at challenges  differently, considering them as new opportunities. I am deeply  convinced that the basis of the worthy implementation of all this is  the Central Bank team, united around values, concerned about the  future of the country, and carrying out its work with a deep  awareness of the need to serve the people and the homeland, "he said.  

At the end of his speech, Martin Galstyan emphasized: <Shocks will  become an integral part of our life, they will be more frequent,  powerful and unpredictable. And in this regard, people need a fulcrum  - the belief that in any situation macro stability, price stability,  and uninterrupted work of the financial sector will be ensured. In  Armenia, this fulcrum is the sustainable macro environment created by  the Central Bank. Thanks to our invisible presence, people make  savings, believing that they will not depreciate, entrepreneurs make  long-term investments, being confident that the risks are manageable,  and the government can focus on implementing development programs  without thinking about the threats associated with instability. I'm   sure we will succeed, "he concluded.

To recall, the "My step" faction proposed Martin Galstyan to the post  of the new head of the Central Bank of Armenia. The term of office of  the current head of the Central Bank of the Republic of Armenia,  Artur Javadyan, ends in early June this year, and this is the second  term of his tenure.  REFERENCE: Martin Galstyan  was born in 1978. He  graduated from the Faculty of Economics of YSU, graduate school,  Ph.D. In the late 2000s, he studied at John F. Kennedy School of  Government, Harvard University, receiving a master's degree in public  administration. He completed several refresher and advanced training  courses in the areas of financial market analysis, financial planning  and strategy, monetary policy theory, economic theory and practice.  M. Galstyan has experience teaching at the Business School of the  American University of Armenia on the subject of industry and  competitive analysis.  Before being appointed a member of the Board  of the Central Bank of the Republic of Armenia in September 2018, M.  Galstyan was the head of the Statistics Department, and since  February 2015- Head of the Central Bank Training and Research Center  in Dilijan.