ADB: Azerbaijan Can Boost Capital Markets Through Fintech

Azerbaijan has significant potential to accelerate its capital market development by actively adopting fintech solutions, according to the Asian Development Bank (ADB).

The country ranks first in the CAREC region for institutional capacity and second after China in technological development, highlighting its ability to rapidly boost capital markets using fintech and existing regulatory and business frameworks, The Caspian Post reports via ADB.

Fintech can enhance both traditional capital markets and alternative financing platforms.

Despite limited experience in regional financial cooperation, Azerbaijan is expected to lead by leveraging its technological and institutional strengths, the ADB notes. Potential initiatives include creating a regional fintech passport, developing a regulatory sandbox and fintech community, harmonizing digital ID regulations, and advancing cross-border payments using distributed ledger technology (DLT).

The ADB emphasizes that regional cooperation is crucial for accelerating capital market growth in CAREC, fostering larger, more liquid markets where companies can access effective funding and investors can find productive opportunities. Cooperation also helps manage risks linked to financial globalization and integration.

Key strategic areas for regional fintech collaboration include payment systems, money transfers, capital market integration, and cross-border fintech regulation and supervision.

The bank stresses that capital market development remains a long-term, complex task, requiring coordinated policies across sectors. While fintech and regional collaboration can speed progress, structural limitations may slow change. Policymakers are advised to follow a phased, strategic approach, which may take 10-20 years depending on the country.