Uzbekistan's Financial System: An Evaluation of Twelve Years of Transition

This article examines the major challenges faced by Uzbekistan in restructuring its financial system to integrate with world financial markets. The article provides a brief discussion of Uzbekistan's financial system prior to the collapse of the former Soviet Union. It reviews the reforms made by the Uzbek government since independence, covering the banking sector, nonbank financial institutions, and the securities market of Uzbekistan. The article then focuses on the evolution of Uzbekistan's banking sector structure, policies of the central bank, and the approach taken to the privatization of state banks, as well as the steps taken to improve bank accounting standards and banking supervision. The development of nonbanking financial institutions is reviewed, the structure and problems of the current insurance market are discussed, and the approach taken to reform of the pension system is presented. A section on the securities market examines the evolution of this sector; state debt securities, corporate equities, and bonds are considered in this evaluation, together with stock exchange trading and 'over the counter' markets. The article concludes with an evaluation of recent policies in light of the unified multiple exchange rates and liberalized access to foreign exchange for current account transactions.