Opening Speech (Governor T.Ishmetov)
Assalomu alaykum. Hurmatli hamkasblar, mehmonlar va tadbir ishtirokchilari. Bugungi tadbirga xush kelibsiz.
Excellencies, dear colleagues, distinguished guests. Welcome to Tashkent.
Many of you have travelled a great distance to be here, and we are grateful that you did. It is my privilege to open the Monetary Policy Dialogue, and to share the theme that will guide our work together: Monetary Policy under Global Volatility and the Wave of Digitalization.
Let me say a word about why we chose it. When we began planning this forum, we asked ourselves a simple question: what concerns central bankers most today – not only in Uzbekistan, but across our region and beyond? Two answers came back, again and again.
The first is uncertainty.
The years since the pandemic have unsettled much of what we thought we understood about inflation. We have faced not one shock but a sequence of overlapping ones – disrupted supply chains, an energy crisis, the fragmentation of trade, turbulence in financial markets and labor markets still adjusting to new realities. The disinflation that followed has begun, but it is far from finished. And many of us are discovering the same hard truth: the last stretch of the journey toward target is proving more difficult than the first.
The deeper lesson is this. Uncertainty is no longer the exception we wait out before normal service resumes. It has become the condition in which we work. We can no longer treat it as noise to be set aside; we must build it into our scenarios, our frameworks, and our decisions. A central bank that plans only for the world it expects is no longer planning seriously.
What makes today's volatility particularly challenging is that it is increasingly global, interconnected, and fast-moving. A geopolitical event in one part of the world can affect commodity prices, financial conditions, exchange rates, and inflation expectations across continents within days. For central banks, this means that resilience can no longer rely solely on reacting to shocks after they occur.
It requires building institutions, analytical frameworks, and policy tools that are robust enough to perform under a wide range of possible outcomes.
The second is digitalization.
And here we are dealing with something different in kind. This is not a shock to be weathered or a cycle to be ridden out. It is a structural transformation – one that is rewiring the foundations of finance and the wider economy while the system continues to run. We are, in a sense, rebuilding the engine of money in mid-flight.
The signs are all around us. Digital payments are expanding at remarkable speed. Tokenized assets are emerging. Central bank digital currencies are moving from concept to experiment, and in some economies to reality. And artificial intelligence is beginning to touch the core of our craft – how we supervise, how we research, even how we read the economy in real time.
I want to be honest about the character of this change, because this is a room that prizes honesty over enthusiasm. Much of the uncertainty digitalization brings is of a hopeful kind – the uncertainty of new possibility, of greater efficiency, wider financial access, stronger productivity, new room for growth. But it would be a mistake to call it uncomplicated. The same forces that promise inclusion also raise hard questions of stability, cybersecurity, consumer protection, and ultimately of what a monetary institution is for in a digital age.
At the same time, operational and financial resilience is becoming a central policy objective, as digital systems must remain secure, reliable, and trusted even under periods of stress and disruption. Our task is not to celebrate the opportunity or fear the risk, but to be clear-eyed about both at once. That, I think, is the work of this forum.
A word, then, on what we hope this dialogue will be.
This is not a venue for scripted positions or careful diplomacy. It is a working dialogue – a space for open, substantive, and at times uncomfortable exchange. I would ask you to challenge one another. Test each other's assumptions. Bring your hardest questions to the table, not your safest ones.
A forum like this earns its relevance precisely in the moments where the conversation becomes difficult, because we believe – as I suspect you all do – that good policy is not formed in isolation. It is forged in exactly this kind of exchange.
There is a reason we hold this gathering in Tashkent. Uzbekistan sits at the center of Central Asia – the one country that borders every other state in our region – and we have come to regard that not as a matter of geography but as a matter of responsibility. Shocks in this region do not respect borders, and neither, we believe, should the search for answers. If this platform can become a place where the region's monetary authorities think together, then this forum will have served its highest purpose.
Let me turn to those gathered here.
We are honored to welcome policy makers from across our region and beyond; our valued colleagues from the IMF, the World Bank and SECO; and the distinguished scholars whose research continues to shape how so many of us think about the problems we face. The quality of the conversation ahead is made possible entirely by the expertise and the diversity of perspective you have brought to this table. To our speakers, our panelists, and every participant – thank you for the knowledge you carry into this room, and for the time and care you have given to being part of it.
With these words, it is my pleasure to declare the Monetary Policy Dialogue officially open. Once again – welcome to Tashkent, and thank you for being with us.
Rahmat. Xush kelibsiz.
And now I have the great pleasure of handing over to our keynote speaker, Professor Athanasios Orphanides. Professor Orphanides is one of the world's leading monetary economists, whose research on monetary policy, central bank strategy, inflation dynamics, and policy under uncertainty has profoundly influenced both academic thinking and practical policymaking. He is Professor of the Practice of Global Economics and Management at MIT Sloan School of Management, former Governor of the Central Bank of Cyprus, and has held senior positions at some of the world's most influential monetary institutions, including the Federal Reserve Board and the European Central Bank.
Professor Orphanides, we are honored by your presence and grateful that you have joined us in Tashkent. The floor is yours.
CBU Governor Panel Speech
Governor Ishmetov, Uzbekistan has been pursuing ambitious economic reforms while also strengthening its monetary policy framework and moving toward full-fledged inflation targeting. The framework that represents best practices of conducting monetary policy under floating FX regime. At the same time, the global environment has become increasingly uncertain and digital transformation is accelerating. From your perspective, how should central banks, particularly in emerging and reform-oriented economies, adapt their policy frameworks to remain credible, agile, and forward-looking in this new environment?
Thank you for this important question.
I would answer it through three simple propositions.
First, credibility and agility are not competing objectives. Credibility comes from being agile within a clear framework.
For Uzbekistan, the move toward inflation targeting has been much more than a change in instruments. It has been a transformation of the way monetary policy is conducted. We established a clear nominal anchor through our 5 percent inflation target, strengthened our analytical capacity, improved forecasting, and enhanced policy communication.
The results are visible. Inflation declined from around 20 percent in early 2018 to 10 percent in 2023 and reached 5.5 percent by May 2026. Core inflation has also eased to around 5.7 percent, suggesting that underlying inflationary pressures are moving in the right direction.
Another important sign of progress has been the gradual decline in inflation expectations. Since 2018, inflation expectations among households and businesses have fallen from around 20 percent to about 10 percent as of May 2026.
We do not view this as a reason for complacency. Expectations remain above levels consistent with our inflation target and therefore continue to require close attention. Nevertheless, the decline has been substantial and suggests that our policy framework, communication efforts, and commitment to price stability are increasingly shaping how economic agents form expectations about future inflation.
At the same time, I want to be candid. While inflation is now much closer to our target than it was a few years ago, we have not yet fully achieved our objective, and our timeline has shifted more than once. But credibility does not mean never facing deviations.
Credibility means maintaining a consistent objective, explaining deviations transparently, and ensuring that expectations continue to converge toward the target over time.
In a reforming economy, credibility is measured not only by inflation statistics but also by public behavior. One of the strongest signs of growing confidence has been de-dollarization. Since 2018, the share of foreign-currency deposits in the banking system has fallen from nearly 50 percent to around 20 percent, while loan dollarization has declined from about 54 percent to 37 percent.
Our own research suggests that this is not merely a cyclical movement but a structural strengthening of confidence in the national currency, with the estimated natural level of dollarization falling significantly in recent years.
Households and businesses increasingly choose to save, borrow, and transact in the national currency. In our experience, de-dollarization is one of the clearest indicators of central bank credibility because it reflects decisions people make with their own money.
My second proposition is that structural reforms make monetary policy more challenging before they make it easier.
Uzbekistan is undergoing deep economic transformation. Markets are being liberalized, administered prices are being adjusted, and competition is being strengthened across sectors.
These reforms are essential for long-term growth and productivity, but they also generate inflationary pressures in the short term. Individual price adjustments may be temporary, but when reforms occur year after year, their cumulative effect can resemble persistent inflation.
The role of the central bank is not to prevent necessary relative-price adjustments. That is the reform process doing its job. Our responsibility is to ensure that these adjustments do not evolve into generalized inflation through wages, expectations, and broader pricing behavior.
This is why monetary policy must remain disciplined. We have maintained a restrictive policy stance to keep inflation expectations anchored while allowing the economy to continue adjusting and growing.
This also highlights the importance of policy coordination. Monetary policy can contain second-round effects, but the overall inflation path depends heavily on how structural reforms and fiscal policies are sequenced. Predictability and coordination reduce the economic cost of disinflation and make reforms more sustainable.
My third proposition is that central banks must modernize continuously if they want their frameworks to remain effective.
A target and a policy rate are only as effective as the channels through which they operate.
First, transmission mechanisms must be strengthened. Policy decisions need to influence market rates, saving behavior, credit conditions, and ultimately inflation. Deepening financial markets and continuing banking-sector reforms remain important priorities for us.
Second, exchange-rate flexibility is essential. For a small and open economy, the exchange rate serves as a shock absorber. Our objective is not to target the exchange rate but to maintain price stability. A credible inflation-targeting regime requires one clear nominal anchor, not multiple competing ones.
Let me conclude.
From Uzbekistan's perspective, adapting to today's environment requires central banks to remain disciplined in their objectives, flexible in their responses, and transparent in their decisions.
These are not separate principles. Together, they form the foundation of a modern monetary policy framework.
Credibility is not built during periods of stability. It is built during periods of uncertainty, reform, and transformation. That is precisely the environment many of us are navigating today. Our task is to ensure that our institutions evolve as quickly as the world around us, while remaining firmly anchored to our mandate of price stability.
Thank you. I look forward to the discussion.
Closing Speech (Governor T.Ishmetov)
Distinguished governors, colleagues, professors, ladies and gentlemen.
As we bring today’s Dialogue to a close, let me begin where I started this morning – with thanks. Thank you for coming to Tashkent. Thank you for sharing your experience so openly, and for giving us a discussion that was, in equal measure, intellectually demanding and genuinely useful.
This Dialogue matters to us for a particular reason. It is the first time the Central Bank of Uzbekistan has convened a forum of this kind. We did not set out to add another conference to a crowded calendar. We set out to create a platform for honest policy exchange – a place where policymakers, international institutions, and scholars could sit at one table and speak plainly about the challenges central banks face today, and the harder ones we will face tomorrow.
This morning, I asked you to bring your most difficult questions rather than your safest ones. You did. And that is precisely why I can say, with some confidence, that this conversation should not be our last. We intend for it to continue – and to become a tradition.
Let me offer three reflections from what I heard today.
The first is about the world we now work in.
Across remarkable differences – of geography, economic structure, policy framework – one message emerged with striking consistency. The environment in which central banks operate has changed in kind, not merely in degree. Volatility is no longer episodic, something we endure and then forget. It is becoming a permanent feature of the landscape. We did not all arrive at that conclusion by the same road, but we arrived at it together, and there is a quiet authority in that agreement.
The second follows directly from the first.
If volatility is now permanent, then no central bank can navigate it on the strength of its own experience alone. An age of fragmentation and repeated shocks demands the opposite of fragmentation in response: more dialogue, more exchange, stronger cooperation.
This is the thought I most want to leave you with, because it is the reason we gathered at all. Uncertainty may be global – but learning must be collective. The shocks cross our borders without asking; our answers should be willing to cross them too.
The third is about digitalization.
Today confirmed what many of us suspected but had not yet said so plainly to one another: digital transformation is no longer a peripheral concern for central banks. It is moving to the center – of how money moves, how financial systems function, and how monetary policy itself may one day operate. Digital payments, data, artificial intelligence, new forms of financial infrastructure – each brings opportunity, and each brings responsibility that did not exist a decade ago. Like every institution represented in this room, we are learning, adapting, and preparing. None of us has the finished answer. But after today, none of us is searching for it alone.
Dear colleagues,
Throughout the day, what struck me most was not where participants agreed, but how much we learned from perspectives different from our own. Central banks brought practical policy experience. International financial institutions contributed a global view across countries and regions. Academic colleagues challenged us to think more deeply, question assumptions, and look beyond immediate policy horizons.
In a world that is becoming more complex, no single institution has all the answers. Central banks cannot rely only on central banks. Policymakers need researchers. Researchers need practitioners. Countries benefit from learning from one another’s successes and mistakes.
That is why the idea behind this Dialogue can be expressed in three simple words: Let's Think Together.
Not because we will always reach the same conclusions, but because better policy emerges when different experiences, disciplines, and institutions are brought into the same conversation. If today's discussions demonstrated anything, it is that the challenges ahead – whether global volatility, technological transformation, artificial intelligence, or the future of monetary policy – are too important to be addressed in isolation.
We hope this forum becomes a place where central banks, academia, and international institutions continue to meet, exchange ideas, and learn from one another. If Tashkent can contribute to that mission, we will consider this Dialogue a success.
Rahmat. Thank you.
