The manat is the official currency of Azerbaijan. This decimal currency is subdivided into 100 qepik. The name of the currency derives from a local word meaning coin, and it was the local name for the ruble in the Azerbaijani language during the time of the Soviet Union.
Although Azerbaijan did not declare independence from the Soviet Union until October 1991, the establishment of an independent Azerbaijani banking system was set forth in May 1991. The National Bank of Azerbaijan had already been established, so a swift monetary conversion was in order for the country after the breakup of the Soviet Union. However, internal political struggles between separatists and Soviet loyalists delayed any actions the bank could take for two years. In 1994, the manat was finally declared the sole legal tender in Azerbaijan. It would be 11 more years until the bank was authorized to originate basic loans to consumers, such as mortgages.
Azerbaijan has a 2000-year history in advanced economics and national currency. However, money was always a volatile subject due to the frequent warfare and changes in power bases. In the 12th and 13th centuries, Azerbaijan became a prominent locale for the Mongolian government. Silver coins were minted in the area and were used until new coins began to be minted by the newly established Safavid states. These rulers minted several coins in the 16th century. When the Safavid state weakened in the 18th century, the nation found itself with coins minted in various regions across the country, which was bad for trade because traders did not feel they could trust a non-centralized currency. However, by the end of the 19th century, currency was largely unified and Azerbaijan had developed the most capitalistic credit-banking system of any country in the Caucuses.
After bowing to Soviet authority during most of the 20th century, the manat was reintroduced in 1992, replacing the ruble at a ratio of 1 manat: 10 rubles. The manat remained stable for the first several years, but lost value after 2005. This prompted the removal of banknotes in denominations less than 100 manat and coins in qepik denominations.
In 2006, the third, and current, manat was introduced. The new manat was valued at 5,000 old manat. Coins were reintroduced in denominations of 1, 3, 5, 10, 20, and 50 qepik. Banknotes in circulation include the 1, 5, 10, 20, 50 and 100-manat notes.