adoption of inflation targeting strategy by the Central Bank of Armenia In view of price stability, the Central bank of Armenia (CBA) develops, approves and implements a monetary policy program (the Armenian Law on Central Bank, Article 6). During first week of each quarter CBA Forecasting Team presents the inflation forecasts for the upcoming 12-month horizon, future monetary policy directions necessary to minimize deviations of projected inflation from the target, which are discussed during the Board meeting. At the beginning of each month, CBA Board decides on the level of the CBA refinancing rate (repo rate), while each quarter it determines the monetary policy directions for the given quarter. Coordination of monetary and fiscal policies is very important aspect for developing and implementing the monetary policy. The coordination involves both opting for basic macroeconomic indicators and issues relating to short-term adjustment of liquidity by the CBA, disbursement of external financial inflows and issuance and allocation of T-bills by the Government. “Agreement on the Principles of Cooperation between the CBA and Ministry of Finance” serves a framework for the coordination of the two policies. The monetary and fiscal policies are coordinated in the process of preparation, adjustment and implementation of medium-term, monthly, quarterly and annual programs. The CBA develops economic and financial projects in cooperation with the Government, and supports their accomplishment if these do not run counter to its objectives. The authorized representatives of the CBA and Ministry of Finance participate in proceedings of standing committees that oversee the pace of policy implementation. The delegates are vested with the right to defend their interests and address issues of concern. Foreign exchange policy The foreign exchange policy of the Central Bank is aimed at enhancing the reliability and international credibility of the Armenian Dram and creating a legal and economic framework for current account operations, flows of the Capital Account and foreign investments, through an effective management of currency reserves of the Republic of Armenia. To this end, an appropriate exchange rate regime has been adopted, principles of the foreign currency operations framework have been developed and a scope of legislative background has been set. Exchange Rate Regime The Central Bank is conducting a freely floating exchange rate regime which is consistent with the principles of liberalized capital account operations and implementation of an independent monetary policy. The Central Bank's intervention in the foreign exchange market is carried out based on