IMF Staff Country Reports

Republic of Kazakhstan: Financial Sector Assessment Program-Technical Note on Astana International Financial Center and the Kazakhstan Financial System

October 17, 2024

Download PDF More Formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

International Monetary Fund. Monetary and Capital Markets Department "Republic of Kazakhstan: Financial Sector Assessment Program-Technical Note on Astana International Financial Center and the Kazakhstan Financial System", IMF Staff Country Reports 2024, 313 (2024), accessed December 5, 2024, https://doi.org/10.5089/9798400291197.002

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote

Summary

Launched in 2018, the Astana International Financial Center (AIFC) aims to establish a leading international financial center for financial services in Astana, as well as to attract foreign investment and support the growth and development of Kazakhstan and the region. Drawing from a model adopted in the Gulf region, the AIFC is established as a distinct and separate jurisdiction operating under its own legal structure, governance arrangements and regulatory framework (the Astana Financial Services Authority (AFSA) is the designated regulatory authority). Nonetheless, there are multiple interconnections between the AIFC and the domestic financial system that may impact financial stability in Kazakhstan. Policy challenges arise when financial services may be provided under distinct legal and regulatory arrangements from both a ‘domestic’ jurisdiction and a jurisdictionally-separated international financial center. Financial activity in the Center remains small, limiting the immediate risks to Kazakhstan financial stability, but given the strategy of the Center, service provision is expected to increase and interlinkages with the Kazakhstan financial system to grow, raising the systemic importance of the AIFC, as well as the associated risks. While some positive steps have been taken to address these risks, additional enhancements are advisable, to further reinforce regulatory arrangements and lower the risks of spillover, arbitrage, and gaps arising from the co-existence of separate regulatory frameworks for the domestic financial system and the AIFC. Development of a Financial Stability Protocol would codify objectives, responsibilities and working procedures and help ensure effective cooperation and collaboration between the Kazakhstan domestic regulatory agency (ARDFM), the central bank (NBK), and AFSA, in support of the common goal of financial stability in Kazakhstan.

Subject: Capital markets, Financial markets, Financial sector development, Financial sector policy and analysis, Financial sector stability, Financial services

Keywords: Capital markets, Financial sector development, Financial sector stability

Publication Details