way adopting the strategy to curb inflation. Adoption of banking legislation: In 1996 the National Assembly of the Republic of Armenia adopted the following laws in order to regularize the Armenian banking sector, as follows: Law on the Central Bank of the Republic of Armenia, Law on Banks and Banking, Law on Bank Bankruptcy, Law on Bank Secrecy. Maintaining price stability has become the number one priority for the Central Bank, and a new framework for banking system rehabilitation measures was established. Creation of national payments and settlements system: In the period 1996–2001 interbank electronic payments system BANKMAIL, government securities accounting and settlements system BOOKENTRY were introduced. The SWIFT system started to be widely used in international payments. In the meantime, efforts were spent to launch the national payments and settlements system in compliance with international standards by creating the unified payment and settlement system ArCa (‘Armenian Card’). Improvement in the banking legislation framework; creation of infrastructures: In the period 2002–2004 considerable improvements and innovations were made to the banking legislation, giving birth, among others, to the establishment of guarantee of deposits of individuals. Further, the Central Bank took on the function for combating money laundering and terrorism financing. The process of rehabilitation of the banking sector was completed and Armenian banks availed themselves of increased levels of replenishment of capital. Central Bank as mega regulator and responsible for financial stability: In 2006 a single framework for risk-based financial regulation and supervision was introduced in Armenia in compliance with international practice. The Central Bank was given authority to regulate and supervise activities of all participants of the financial sector. So, the Central Bank took on the function of megaregulator along with responsibility for maintaining financial stability. A corporate governance culture was introduced to the financial sector, the banking system in STAGES OF DEVELOPMENT OF THE CENTRAL BANK4 particular. Banks became increasingly service-friendly, in a sounder environment of competitiveness. Inflation targeting: In 2006 the Central Bank moved to a fully-fledged inflation targeting strategy. And since CBA's main and primary objective is to ensure price stability and considering the expectations that inflationary risks will persist in the external world, the annual inflation target band for 2008-2010 has been set at 4% (+1.5%). Development of financial sector; institutional and infrastructural reforms: In the period 2007–2011, the Central Bank initiated legislative reforms pertaining to the financial system operations. This set up a ground for