Tashkent, Uzbekistan (UzDaily.com) — The Senate held a plenary session at which the Law "On the Sanation and Liquidation of Banks" was reviewed.

In recent years, significant efforts have been made in Uzbekistan to reform the banking system. An example of this is the reforms aimed at creating banking legislation that meets international standards. The adoption of the laws "On the Central Bank of the Republic of Uzbekistan" and "On Banks and Banking Activities" in their new editions laid the foundation for a new phase of banking sector reforms.

Regulation and control of banking activities play a key role in ensuring financial stability. However, despite measures aligned with international standards, the possibility of a financial crisis in certain banks cannot be ruled out.

Current legislation does not provide a mechanism for the sanation of banks, and in the event of insolvency, banks are subject to forced liquidation in accordance with the Law "On Banks and Banking Activities." Nevertheless, if large banks become insolvent, their liquidation may lead to a crisis in the banking system.

Due to the absence of a mechanism for the sanation of banks in the country, there is a need to establish a legal framework to address this issue.

The proposed Law defines the powers of the authorized state body for bank sanation, the goals and principles of sanation, the grounds for initiating sanation, financing mechanisms, and the procedure for voluntary and forced liquidation of banks.

The adoption of the Law is aimed at effectively managing the instability of banks in case of insolvency, reducing the negative impact of such banks on the banking system and the economy, ensuring the continuity of their vital functions, protecting the interests of depositors and creditors, increasing client trust in the banking system, and strengthening financial stability in the country.

After the discussion, the law was approved by the senators.