Will electronic money be circulated in Azerbaijan?

Licenses are being issued to electronic money and payment organizations in Azerbaijan. This process began at the end of May and is currently ongoing. Some experts believe this will result in the circulation of electronic money in Azerbaijan. Last year, the National Assembly passed the "Law on Payment Services and Payment Systems." According to Article 48.1 of the law, an electronic money organization can operate in the field of payment services only after obtaining a license. Efforts to transition to digital currency began in Sweden in 2006.

Electronic money is a type of currency that is stored only on computers, tablets, or smartphones and has a determined value. In 2023, the global digital payment market revenue was $111.2 billion.

Member of the VI convocation of the National Assembly, Vugar Bayramov, told Turan that over 20 electronic money and payment organizations have applied for a license so far. The number of organizations holding these licenses may increase soon. According to the economist, this indicates that it will soon be possible to circulate electronic money in Azerbaijan: "Electronic money, in addition to facilitating the payment system, may gradually lead to the minimization of the use of paper money in the future."

Bayramov states that this is a new opportunity for banks as well as a new product for the money market: "At the same time, electronic money serves to increase transparency. These funds can also become a source of income for our citizens through electronic savings and even operations in the money market."

Economist Natig Jafarli told AzadliqRadio that electronic money does not mean cryptocurrency: "The algorithm of cryptocurrency is entirely different. It doesn't need a license, and there is no state regulation mechanism for it." According to the expert, there have been attempts related to electronic money in countries like China, Japan, and Russia: "They have tried to issue their currencies in electronic form, but no progress has been made because it is illogical. We have cards in our pockets, and the money in those cards is formally a form of electronic money."

Jafarli emphasizes that he finds it difficult to understand what the government aims to achieve by circulating electronic money: "This process should be under the control of the Central Bank. The Constitution states that there must be a single payment system in the country, regulated by the Central Bank. If the process is regulated by the Central Bank, how will a private company be allowed to issue money? There are many questions here."

The economist states that even if electronic money is circulated in Azerbaijan, it will have no impact on the exchange rate of the manat: "External influences on the manat are very minimal. The manat is regulated by administrative rules."