A new state financial institution, "Kylym Bank," has been established in Kyrgyzstan. According to the Cabinet of Ministers, the new bank will serve as a significant element of the country's financial infrastructure. Its responsibilities include conducting banking operations, managing securities, their accounting and storage, as well as mediating between transaction participants. Additionally, the bank will oversee the numbering and registration of securities. In fact, "Kylym Bank" will become a key servicing link of the stock market.

The resolution to establish "Kylym Bank" was signed by the Chairman of the Cabinet of Ministers, Adylbek Kasymaliev, on December 26 of last year. According to the document, the bank was established with 100% state ownership. The authorized capital of the new financial institution will amount to 1 billion KGS, with a nominal value of 1,000 KGS per share. It is planned that by 2027, the bank's capital will increase to 5 billion KGS.

At first glance, it may seem that another state-owned bank is unnecessary, given the existence of "Aiyl Bank", "Eldik Bank" and the State Development Bank. However, the functional specialization of the new institution is significantly different.

"Kylym Bank" is being established as a financial institution aimed at stimulating the development of the stock market and reducing risks for its participants. Its key role will be to act as a guarantor for trading participants, as well as a clearing center and central counterparty. This means the bank will assume credit risks and ensure the reliability of transaction settlements.

Similar structures exist in several countries: Takasbank in Turkey, the National Clearing Center in Russia, the Clearing House of the Astana International Financial Center in Kazakhstan, as well as the Republican Central Securities Depository in Belarus, etc.

Worldwide, stock exchanges operate as marketplaces for concluding transactions, while their execution is ensured by specialized financial institutions, such as central counterparties and central depositories. In Kyrgyzstan, stock exchanges lack the function of conducting settlement operations, which forces them to distribute transactions across multiple banks. This approach increases transaction costs and raises the overall cost of transactions.

In the absence of such an institution, the stock market in Kyrgyzstan has been forced to distribute its operations among various commercial banks: KICB handles bond transactions, "Eldik Bank" manages government securities and the central depository operates through "Demir Bank". The establishment of "Kylym Bank" will consolidate this fragmented liquidity and create a unified settlement infrastructure. Additionally, the bank will be able to provide market participants with leverage to expand market capacity. Currently, transactions on the stock market are conducted with 100% cash collateralization, significantly reducing the market's investment potential.

In addition to servicing the stock market, "Kylym Bank" will assume the role of a numbering agency to assign internationally recognized codes to national securities. This will enable foreign investors to access information about Kyrgyzstan's securities through international stock market bulletins. Furthermore, the bank will focus its efforts on digitalization to provide the population with convenient and easy access to banking services, including investment opportunities for individuals.

The new bank will act as one of the market makers to maintain liquidity and operations in the secondary market, aligning with the practices of developed markets.