Russia Impact of financial crisis on banking system
A necessary status for economic development is the high investing activity. It is achieved through the on-going growing of investing resources and the most efficient usage of the precedence countries of stuff production and societal domain. Investings formed a production capacity at new scientific and technological base and find the competitory place of states in universe markets. This is non an of import function for many provinces, particularly get awaying from the economic and societal disadvantage, is to pull foreign capital in the signifier of direct investings and other assets.
At the minute the Russian economic system is sing the deepest crisis that affects all domains of Russian life, and, chiefly, on the societal domain, which in bend creates societal tensenesss in society. The authorities is seeking to cover with this crisis, but rather unsuccessfully. To help the State in get the better ofing the economic crisis called investing. Investings are designed to elate and development of production, increasing its capacity, technological degree.
The purpose of this work is to analyze and reexamine of the planetary fiscal crisis on the banking system of Russia, about the jobs in this country and how to work out them.
: 1. The kernel and features of the planetary fiscal crisis.
1.1. The nature and causes of the crisis.
As manifested in the present tendencies in the flowering planetary fiscal crisis shows how much more terrible compared to the recessions in 1991, 1998-1999 and 2001, he threatens to go. Simultaneously, it is clear that began in 2008, the planetary crisis is non connected merely with the overrun of trade goods, but is a effect of systemic contradictions of the universe economic system. Blossoming crisis can non merely reset the accrued mass of trade goods, so the economic system will rapidly re-growth curve. Developments in U.S. gross revenues of goods flooded the market will non take to a healthier U.S. and planetary economic system.
2008 decidedly go down in economic history of Russia aroused by the fiscal crisis and a host of attendant negative effects. Situation in the state for several months does non rest nor authorities functionaries, or ordinary citizens. Despite the fact that the fiscal crisis today on everyone ‘s lips, the bulk of Russians and remained in the dark, why things had turned out that manner, and when times get better times.
Oil Monetary values
The outgrowth of the crisis associated with the undermentioned factors:
general cyclical economic development ;
overheated recognition market and its consequence appears before the mortgage crisis ;
high monetary values of trade goods ( including oil ) ;
overheating of the stock market ;
In the 2000 ‘s has seen an detonation of ingestion, accompanied by a steady rise in trade good monetary values – after the Great Depression of consumer goods in 1980-2000. But in 2008 the monetary values of many trade goods, particularly oil and nutrient, have reached such a degree that began to do important economic harm. [ ]
In January 2008, oil monetary values crossed $ 100 a barrel. [ ] July 11, 2008 the monetary value of oil of grade WTI reached a record, the history, $ 147.27 per barrel, and so began to worsen – to $ 61 on Oct. 24 that same twelvemonth [ ] and up to $ 51 in November. Food and fuel crises were discussed at the July 34 th acme of the Group of Eight. [ ]
Decreased dramatically the demand for cars: the August 2008 auto gross revenues in Europe declined by 16 % in the U.S. in September auto gross revenues dropped 26 % in Japan – by 5,3 % . This led to a decrease in the production of metal and decrease of occupations in the automotive and related industries.
A The immediate predecessor of the general fiscal and banking crisis was a crisis in the U.S. subprime mortgage ( subprime ) in 2007, that is, mortgage loaning for low-income and hapless recognition history. As a consequence of 20 % autumn in monetary values, American householders are poorer by about $ 5 trillion. [ ]
American moneyman George Soros in Die Welt on 14 October 2008 defined the function of the “ mortgage bubble ” as the lone trigger that led to the fact that the bursting of the larger bubble. “ [ ] Almost every twenty-four hours some or other experts, analysing state of affairs, expressed the position that the Russian market is basically strong, that we have big militias, budget excesss and lifting oil monetary values. Time passed, and market participants if they were deaf to, sort, statements and pig-headedly continued to wait, as studies from the forepart, macroeconomic information from the U.S.. News, nevertheless, came non encouraging. A recession in the U.S. , which still seemed to fall far away and improbable with each go throughing twenty-four hours became more and more taken for granted. It is now even the most despairing optimists agree that the economic lag in the U.S. in the close hereafter is inevitable, and speak about the recession of the plane “ will be – will non be ” moved into “ how long ” . Rate once more instead fluctuations: from two-three quarters, up to several old ages. The latest version now sounds like something a spot excessively baleful, and it seems improbable, but, retrieving the history of the issue, come to the decision that this development can non be excluded. This option would intend a restructuring of the planetary system of fiscal relationships, altering the orientation of the system and happen new points of stableness. The old system, based on the regulation of the American dollar, after the rampant development comes into disrepair, manifestations of which we are now witnessing. Assurance in the dollar as the universe currency is steadily diminishing, as evidenced by the actions of some States to cut down the proportion of the currency in their militias, talk about the passage of several states in the computation of export contracts in local currency. In add-on, let downing for dollar enterprise is a series of Middle Eastern oil powers to make a individual currency for the part for several old ages.
The American economic system is fall ining due to inordinate maltreatment of publishing imperativenesss. Of class, an of import factor for the generation of the crisis processes in the U.S. economic system has become the private sector loaning. The American people are happy, until late a batch of purchases on recognition, runing from nutrient and stoping with lodging. It got to that degree of ingestion in the U.S. economic system has exceeded the degree of personal income. Naturally, when something needs to pay the measures and it seems that clip has come. Massive private bankruptcy and the attach toing corporate bankruptcy, shattered, foremost of all, the fiscal system, which contributed most to rising prices “ bubble ” in the sector of the U.S. mortgage loaning. Bubbles in general have become an built-in portion of modern planetary fiscal system. Over the last decennary, merely in the U.S. economic system is the 2nd largest bubble. The first was in the beginning of the millenary in the high-tech sector, “ the new American economic system. ” In the universe of the investing procedure into a running about in hunt of “ hot bars ” . The tremendous fiscal resources, normally in dollar footings, traveling from one sector to another. They were hotfooting the other “ fat cats ” on a smaller graduated table, which farther heated peddling “ pie ” . This state of affairs is mostly besides due to the alone position of the dollar as universe currency. Currency, and, accordingly, geographic variegation would cut down the hazards of investing in certain sectors of developed and developing economic systems. This may to some extent, would detain the warming of single “ pies ” . The universe seems to this and goes. At the minute all the more important economic experts are inquiring what will go on when the dollar loses its position as a universe currency. Several scenarios, he may be replaced by the euro will lift, but the euro-zone economic system is besides presently does non reflect and barely ready to claim a dominant function. Possibly the outgrowth of several currency countries diversifitsiruemyh on a geographical footing. In this instance the dollar will travel up from the pedestal basic unit of history can fall in several currencies: the euro, hankering, yuan, British lb, and in the hereafter incorporate currency dinar Middle East, perchance the Russian ruble. The truth as ever lies someplace in the center, clip, as they say, will state.
For the Russian stock market all the procedures in the present minute in the planetary economic system, reflected negatively. Voices of the strength of our market someway eased. Yes, what to state, the traditional lacquer investsoobschestva clip – the presidential elections were held about unnoticed. February for the stock market has developed really favourably, particularly compared to “ black ” January, but a major correlativity with the presidential elections that something can non be traced. Probably played a series of rate decreases in the U.S. and a weak positive with the developed markets. Now we remain virtually one on one with an external background and is improbable to be able to defy him earnestly. It is however admitted that the king of beasts ‘s portion of investings in Russian companies – foreign investing, the figure of private investors is undistinguished. This may bespeak escape of stockholders of common financess, observed in the 2nd half of 2007 and increased activity in the belongings sector in Moscow and in several parts, which began in 2008. Peoples withdraw their money from the stock market and looking for other investing chances. In add-on, during the liquidness crunch in the banking sector, raising involvement rates on sedimentations, besides plays to the disadvantage of affecting citizens in the stock market. Unsuccessful experience of “ people ‘s IPO ” in many respects besides dampened the involvement of ordinary Russians to the stock market. Therefore, the function of private investors resident in the Russian stock market will worsen, and the function of foreign investors merely increase. This event will pave the manner for Russian market in such a big and conservative foreign investors, like pension financess and insurance companies. Right here and play a function and a stable economic state of affairs in Russia, and the volume of gold militias, and excess budget. Of class, the reaching of such participants in Russia will take to a rush in our market, but on the “ island of stableness ” , of which he spoke in Davos, Mr. Kudrin will hold to bury everlastingly. We will look more carefully at the Western markets, and hope that we will ne’er go on the same thing happened with the new Asiatic Liberation Tigers of Tamil Eelams “ , when one point, investors from developed states decided to retreat the money from the markets of these states. As a consequence, the Liberation Tigers of Tamil Eelams had to raise their dress suits. In the interim, we can merely trust that in the U.S. have all of a sudden become good, and we will besides cleverly as earlier, turning. Merely now it would be nice merely to turn. [ ]
Harmonizing to the physician of economic scientific disciplines Gavriil Popov ( terminal of October 2008 ) , modern economic life, guided non by the market and non the State Planning Commission, and corporations to speculators who created this unreal universe. Loan and Mortgage – is mounting guess corporations in future income people. Therefore, the chief decision refering the activities of these corporations is this: they were able to feed and swell because crept into our hereafter. [ ]
At the same clip, Popov negatively evaluates proposals for the nationalisation of corporations and Bankss, as a signifier of battle with the crisis. In his position, to guarantee cost effectivity, they should stay private. It remains a enigma how the market can pull off the economic life, based on private corporations, without the speculators?
Observer Magazine Research ( New York ) , Alexei Bayer in the center of November 2008 suggested that, after blowing off the mortgage, recognition and trade good bubble could happen market prostration in U.S. authorities debt, the effect will be uncontrolled emanation of money in the U.S. , which in bend cause planetary rising prices around the universe. [ ]
1.2 Why the fiscal crisis hit Russia?
The unfavourable state of affairs in the U.S. economic system could non impact the remainder of the concern universe, and Russia is no exclusion. The most to a great extent on the economic system hit impossibleness of obtaining inexpensive foreign loans in the interbank market, every bit good as the lessening in exports. In add-on, the cause emerged in our state, the fiscal crisis is a autumn in oil monetary values – lightning and big – from 150 $ to 40 $ for a barrel. Energy ( gas and oil ) are of paramount importance for the rich of Russia, so the diminution in trade good monetary values has greatly reduced and income from its exports.
In add-on to the external causes of the fiscal crisis should non be ignored and causes internal. Since May 2008, the growing of stock indices, RTS and MICEX, non merely stopped, but began its diminution. In general, to day of the month, the indices fell by 70 % . His spoon of pitch in August 2008 and introduced the Georgian-Ossetian struggle that gave rise to confrontation between Russia and Western states and caused the escape of foreign capital from the state. But many Western economic experts tend to see the ground for this is non so much in the belligerencies, but in a small earlier dirts emerged around energy company TNK-BP and Mechel, as Western and Russian directors besides differed in their positions on administration. And although most of these struggles have been resolved, the attitude of the West to our state in many ways has changed, and the stock market has suffered many losingss.
2. Problems in the banking sector of Russia ‘s economic system amid the planetary fiscal crisis.
2.1. Channels impact of the crisis on the economic system of Russia.
Monetary values for land and existent estate besides has undergone a alteration in the way of diminishing. But the fiscal crisis in Russia played a positive function here shortly, holding saved the existent estate market by unnaturally blow uping the value of objects and its uninterrupted growing.
In general, except for the negative effects of any crisis had some positive minutes. In the industrial market is a alleged “ natural choice ” . Afloat are merely the most feasible companies with strong policy direction. Uncompetitive same companies leave the market. But in the battle for the endurance of endeavors in the competitory environment may besides happen and cut downing the monetary values of some goods and services, which, of class, is besides a positive development. An illustration of this – gasoline, land, existent estate. The crisis leads to a natural market pricing. In add-on, a general economic recovery and entree to the head of domestic manufacturers.
Despite the beginning of the universe economic crisis, economic growing in Russia continues. The domestic market remains attractive for foreign investing. In I one-fourth 2008, direct investing in the economic system of Russia amounted to 5.585 billion dollars, which is 42,8 % lower than in 2007. The volume of portfolio investing decreased by 37.5 % and $ 123 million dollars. At the beginning of the II one-fourth of the state of affairs improved. In May, a net influx of capital was estimated at 15 billion dollars. As a consequence, it is calculated over 40 billion dollars, which is comparable with the consequences of 2006, when investings totaled $ 41 billion.
Accumulated foreign capital in the economic system at the terminal of March 2008 amounted to 221.0 billion dollars, which is 45,9 % more than in 2007 in the same period of the twelvemonth. Greatest experience in the economic system, foreign capital portion of loans from international fiscal organisations. It amounts to 48,8 % and applies chiefly to the debts of Russian big companies. The increased involvement for foreign investors since the crisis began in the American economic system is the stock market in Russia. In recent months it had record influxs of capital. In 2007, Russian companies ( mostly due to IPO ) attracted 47.3 billion dollars of investing in foreign markets stocks and bonds.
Russia ‘s portion in universe GDP in 2007 reached 3.18 % . In 2005 it was 3.09 % , somewhat in front of Italy ( 2.96 % ) and Brazil ( 2,88 % ) . For the nominal GDP by the economic system of Russia is the ten percent in the universe. By the terminal of 2008 is expected to switch the state to eighth topographic point. Russia ‘s GDP growing from 1999 to 2007 was 83 % . Industrial end product increased by 74 % , agricultural merchandises – by 40 % . Among Russian industries are peculiarly strong: production of energy minerals, mush and paper industry, metallurgy and electric power. In 2007 Russia produced 491.5 million dozenss of oil and gas condensate. Annual production growing amounted to 2,2 % . In 2006, he besides was equal to 2,2 % in 2005 – reached 7.9 % . Russia ‘s foreign trade grew in 2007 to 25,8 % ( to 552.2 billion dollars ) . The excess reached 152.8 billion dollars. The portion of petroleum oil and natural gas exporting states as of 2006 amounted to 46,2 % , another 6.7 % was diesel fuel, 4,5 % – for fuel oil for other crude oil merchandises ( including gasoline ) – 3,4 % . The portion of metals and other natural stuffs for foreign industry accounted for about 20 % . In imports, the state occupy the first topographic point machines and equipment – 35,7 % , to automotive merchandises account for more than 10 % .
Consequences of 2008 compared with 2007 above. The IMF studies that in 2008 Russia ‘s GDP growing was about 7,8 % . There is a high investing activity of the province. However, the province of economic roar in Russia non merely due to high energy monetary values, but besides stretched the capacity of other markets. Counting on a stable growing in the coming old ages, local corporations are increasing their debt to foreign Bankss. In bend, foreign Bankss willing to impart to Russian corporate clients, even without a clear thought about the effectivity of their concern. As security appears less dependable information about the chances of a specific Russian companies, as a general positive appraisal of the chances of Russian market. But the apparently positive background in 2008 for Russia negative tendencies.
For 2007, rising prices, harmonizing to official figures, amounted to 11,9 % . The monetary values for consumer goods ( chiefly nutrient ) rose by 25-50 % . However, in 2008 rising prices was even more important, transcending last twelvemonth ‘s gait by 1,7 times. Measures taken by the Government to stop dead the monetary values have non brought important consequences. Halt the lifting rising prices in the national model failed. State analysts have been powerless to explicate the ground for the devaluation of international currencies. As a consequence, the summer of 2008 slowed the growing of consumer commercialism, the rate of wage addition was below rising prices.
Throughout the period of economic growing of cheaper labour force by the Government as the state ‘s competitory advantage. In practising the RF emanation on the market of new paper money ( particularly cuts in 1000 and 5000 rubles ) , increased the money supply faster than the increased production. New money came into the economic system is non a significant addition in wages and pensions, lending to increased demand, exciting an addition in production, and through the acquisition of U.S. rising prices in natural stuffs corporations. As a consequence, controlled rising prices helped incorporate the growing of incomes. Issue policy of the EU and the U.S. was similar. During the planetary economic enlargement, it raised the profitableness of big companies. However, if the RF emanations constrained by the growing of rewards of the population, so the “ old industrial states ” monetary values facilitates corporations cut down rewards. Execution of this policy, along with the remotion of production to the fringe of micro-grafted in 2008 to the beginning of a systemic crisis of universe economic system.
Continuing to run under the old strategy, the Government of Russia ignores tendencies of the planetary crisis. In the context of falling ingestion in the U.S. , UK and the EU the chief ground for Russia ‘s investing attraction ( merely every bit in other states BRIC ) was a huge domestic market. Its limitation can ensue in major jobs for Russia even before they happen perceived diminution in oil monetary values. Before the terminal of 2008 in Russia was expected foremost fall in residential existent estate market, caused a national crisis mortgage.
Closely linked with the universe economic system as a provider of natural stuffs, Russia has remained with the 1990 ‘s instead closed to multinational corporations. Due to this there were able to organize their ain strengths Corporation, which has non happened in Kazakhstan, and most states in Eastern Europe. Powerful economic resurgence of 2000-2007, traveling to Russia in conditions of limited entree to foreign capital. The right to work in the domestic market gives the Kremlin, frequently merely in exchange for opening the Russian capital market entree in other states. Large Russian companies freely credited on the universe market, while the domestic market was closed for inexpensive loans. Owned domestic corporations, Bankss conducted a policy of guess, imparting to little concerns and the population under the vigorish ( more than 7 % ) . As a consequence, the development of domestic market-oriented companies had held back, and Russian multinational corporations provide their net incomes.
Presently, existent estate monetary values in Russia is much higher than the EU-wide, given the fact that the quality of most of the flats remains low. A similar state of affairs exists with a bound monopolisation of the lodging market, particularly noticeable in Moscow. Bad existent estate monetary values remain supported by the province bureaucratism, protecting the associated big companies. Along with the high cost of houses and flats in Russia there is highly overvalued one-year involvement. Geting loans of 3-5 % , domestic Bankss to impart to people to turn up increased rate ( up to 25 % ) and frequently punish you for early refund of debt.
Monthly income for a household of Russian “ in-between category ” is seldom more than 2500 euros. The construction of Russian society, the proportion of people who earn 300-800 euros, less than 17 % , the proportion of workers having monthly 800-1500 euros is about 7 % . By paying extortionate rates for over-priced lodging, debitors all the clip on the brink of bankruptcy household. The stuff has already undermined the ability of most rising prices. Equally shortly as the U.S. crisis will attest itself in trade, there will be a new intensification of planetary rising prices, which contributes to the gap of Russia ‘s mortgage crisis.
2.2 Impact of the planetary fiscal crisis on pecuniary policy and banking system of Russia.
Some of the effects of the fiscal crisis there is now, and some of Russia has yet to brush.
Today, in add-on to the diminution of the stock market we have a depreciation of the ruble in relation to major universe currencies – the dollar and euro. That is, the devaluation of the ruble – already a world, although it is non every bit crisp as in 1998. In general, the expected overall diminution in incomes amid lifting monetary values for goods and services.
The impact of fiscal crisis in Russia itself felt about all endeavors, particularly export-oriented. Even the largest companies are weaving up many investing plans, in all possible ways of cut downing the outgo of its budget, which, in bend, entails the mass layoffs and occupation cuts.
With respect to the banking system, it may be noted here the stricter demands of Bankss to possible borrowers, raising involvement rates on new loans, settlement of many mortgage and consumer plans ( eg, unbarred and involvement free loans ) .
On the Eve of the crisis the Russian economic system has demonstrated a really good macroeconomic public presentation: a important budget excess and current history, the rapid growing of international militias and resources in the budget financess. However, in recent old ages has been allowed some moderation of pecuniary and financial policies. For illustration, in 2007 federal budget outgos increased in existent footings by 24.9 % , ie their growing is more than three times higher than GDP growing. In economic sciences, a steady low involvement rates, really negative in existent footings, taking to the rapid growing of loaning. The natural consequence was “ overheated ” economic system. On the one manus, it has contributed to increasing inflationary force per unit areas, on the other manus – rapid build-up of external adoption. In merely three old ages ( 2005-2007 ) of private sector external debt has increased about quadruple. At the beginning of 2005 it amounted to 108 billion dollars. But at the terminal of 2007 417 200 000 000 ( see Fig. 5 ) . The rapid growing of public disbursement and imports disguised monetary value additions for oil and other Russian exports. However, the existent procedures described make the Russian economic system vulnerable to the effects of planetary crisis.
The engagement of local Bankss in the planetary capital markets have enabled them to transport out the enlargement in the recognition market, which has led to increased handiness of hard currency resources and cut down the rates on the domestic market adoptions. Net international investing place of recognition establishments steadily declined. In late 2005, its value was -20.827 billion dollars, but in the terminal of III one-fourth 2008 – -99.651 billion
Decline in oil monetary values since last May, and the limitation of borrowing on the international market have caused a important weakening of balance of payments in the 2nd half of 2008, net private capital influxs of $ 83 billion U.S. dollars in 2007, turned into his net escape of $ 130 billion. in 2008 in the IV one-fourth of last twelvemonth in comparing with I one-fourth of the current history was reduced by 4,5 times – from 37 billion to $ 8 billion dollars, and in general for the twelvemonth it was 99 billion dollars ( Table. 1 ) . In 2009, the expected zero current history balance.
Balance of Payments of the Russian Federation in 2008 ( billion dollars )
As a consequence, last twelvemonth ‘s foreign exchange militias fell by 45 billion dollars ( and gold – for 51.7 billion ) , and virtually ceased to map as a beginning of money supply. Their diminution has resulted in a serious lag in money supply. Over the months, and in 2008 the money supply M2 has even decreased by 0,3 % , while in 2007 over the same period it increased by 35,2 % ( see Figure 6 ) ..
The chief beginning of money supply has been the completion of liquidness by the pecuniary governments. Stairss taken to saturate the market allowed short-run liquidness, but could non counterbalance for the deficiency of long-run resources. The offer “ long term ” money in the economic system and stabilise the money market in the long term should supply institutional investors, every bit good as their ain commercial Bankss through recognition activity.
One beginning of “ long term ” liabilities are the sedimentations of legal entities and single sedimentations placed for a period transcending three old ages. Over the past two old ages, their portion in entire liabilities amounted to 5 – 6 % .
Given the deficiency of “ long term ” money Bankss have to as a beginning for the formation of “ long term ” assets to utilize “ short ” duties. And this state of affairs is non alone to the current fiscal instability, but besides for the last few old ages, when current liabilities covered at least 10 – 14 % long-run assets of Bankss. Clearly, farther increasing long-run loans from short-run liabilities could adversely impact the liquidness of the banking system.
In recent lag in the loan portfolio has a distinguishable character. In November 2008 compared with October, the volume of loans granted to the population even decreased by 0,7 % , an addition of bank loans to endeavors amounted to merely 0.7 % ( see Fig. 7 ) . Following 11 months of 2008 owed to recognition establishments of non-financial establishments increased by 32,6 % against 46,9 % for the same period in 2007
The kineticss of bank loaning in 2008 was influenced by the fact that in times of crisis, many organisations have begun to turn investing plans, cut down operating costs. Banks began to fasten demands for fiscal position of citizens in connexion with an increased hazard of non-repayment of loans ( reduced buying power, increasing the figure of unemployed ) . In the close future Bankss will hold to pay more attending to pull resources from the domestic market.
Increased competition in the domestic fiscal market in 2008 led to increased involvement rates on bank sedimentations. Therefore, the mean leaden rate on ruble sedimentations in recognition establishments up to one twelvemonth increased from 5,4 % dad in January 2008 to 6,2 % per annum in October, while the mean leaden rate on ruble sedimentations of endeavors up to one twelvemonth – with 3 to 6,7 % .
Note that until now Bankss raise rates on sedimentations of persons was really modest and did non countervail the acceleration in rising prices. This rate of growing of bank sedimentations have decreased ( see Fig. 8 ) .
In add-on to sedimentations of the population and endeavors in 2008, the major beginnings of resource coevals of commercial Bankss have been credits, sedimentations and other financess received from other recognition establishments, every bit good as financess of the organisations on colony and other histories and bonds. The portion of these articles, including sedimentations, at the beginning of December 2008 accounted for 71,3 % of entire liabilities ( see Table. 2 ) . The portion of loans the Bank of Russia, received by Bankss increased by 8 PP – up to 8,2 % in entire liabilities. Clearly, the Bank of Russia loans are short term and regulative nature.
The value of the resources for commercial Bankss influenced by alterations in the value of the basic articles of bank liabilities, that is, foremost of all change the rates on sedimentations from families and endeavors. To back up its activities, commercial Bankss can non impart at lower involvement rate than the rates on sedimentations. At the same clip in the Russian context the latter should be at least zero in existent footings to excite nest eggs.
Bank of Russia will increase the deepness and liquidness of the Russian fiscal market and accomplish growing in the efficiency of its involvement policy is to better the direction of liquidness in the banking sector, to develop a system of analysis of pecuniary policy, macroeconomic mold and prediction.
Particular importance attaches to the Bank of Russia constructing public assurance in the enforced pecuniary policy, increase its openness and transparence, and public instruction of its ends, aims and steps adopted. [ ]
2.3 Problems of the Russian banking system and steps to get the better of them.
In “ Guidelines for the individual province pecuniary policy for 2009 and for 2010 and 2011 ” reflects the chief challenges confronting the Bank of Russia in the period in line with the Government of the Russian Federation ‘s economic policies, and place the steps of pecuniary policy, taking to accomplish their ends. The clip skyline coincides with a planning skyline of the federal budget.
Bank of Russia and Government of the Russian Federation in discrepancies of the Russian economic system in 2009 and during 2010 and 2011 semen from a individual count of external and internal conditions of its operation. In the approaching three old ages the chief undertaking of pecuniary policy is the consistent diminution in rising prices to 5-6,8 % in 2011 ( estimated December to December ) .
The world-wide tendency of important growing in nutrient monetary values and energy monetary values, every bit good as faster growing in domestic demand in 2007 resulted in higher than anticipated earlier, rising prices in Russia. Therefore, the Bank of Russia carried out actions for the return of rising prices on the flight of diminution.
Accelerating rising prices, every bit good as expected in the approaching period, the external and internal macroeconomic conditions confirm the demand for more flexible exchange rate policy and the active usage of involvement rate policy. Dynamicss of pecuniary sums will stay an of import index for measuring pecuniary conditions and the medium-term tendency of rising prices.
Bank of Russia will go on to travel to the government of freely drifting exchange rate, systematically weakening the rigidness of the binding of the ruble to the currency basket and leting greater volatility of its value.
Government of freely drifting exchange rate is necessary for the debut of rising prices aiming in its entireness. Simultaneously with the decrease of engagement of the Bank of Russia rate repair will necessitate execution of steps to do the involvement rate the Bank of Russia ‘s chief instrument of pecuniary policy, act uponing inflationary outlooks of economic agents, and organizing a pecuniary conditions in the economic system.
In planing pecuniary policy for the period 2009-2011 Bank of Russia takes into history possible alterations in universe monetary values for cardinal trade goods of Russian exports, particularly for energy. In the instance of decrease of these monetary values while go oning to increase imports quickly, supported by domestic demand, it may do a important decrease in trade excesss, and even the formation of its shortage.
As in this instance would be weakened consequence of one of the factors finding the strengthening of the ruble, the Bank of Russia may cut down the buying currency on the domestic market, carried out in order to incorporate the gait of the national currency. Decisions on the nature and extent of intercession of the Bank of Russia on the domestic market will be chiefly due to the aims of pecuniary and financial policies.
Expected diminution in foreign exchange intercession can significantly cut down the function of net foreign assets of pecuniary governments control as the chief beginning of growing of money supply. In order to guarantee that the money supply the demand for money the Bank of Russia will go on to actively utilize the refinancing operations of Bankss. It will besides heighten the function of involvement rate policy of Bank of Russia to cut down rising prices.
To guarantee conformity with the kineticss of rising prices mark trajectory Bank of Russia will utilize all agencies at its disposal tools of pecuniary policy. For a successful pecuniary policy will impact to some extent as a budgetary mechanisms of accretion of excess grosss from oil and gas at high monetary values, universe energy market, every bit good as of conservative financial policy.
Interest rate policy of Bank of Russia will be based on the province of the economic system and the kineticss of rising prices. An of import undertaking of involvement policy will be a gradual narrowing of the corridor of involvement rates on its ain Bank of Russia and cut down volatility in money market rates. At the same clip increasing influence on the formation of involvement rates, money market rates will hold on market-based instruments refinancing of Bankss, chiefly on direct REPO trades.
The chief hazard factor for the Russian banking sector in the international fiscal crisis is the important decrease of entree to resources from international capital markets and cut down chances for external refinancing of earlier loans borrowed by the important rise in monetary value of borrowed financess for premier borrowers and the existent remotion of such chances for other borrowers.
The effect of these factors was the infliction of Russian Bankss more conservative attack to loaning and the appraisal of recognition hazard. In bend, this leads to take down growing of recognition investings in the economic system and cut down the fiscal consequence ( net income ) of recognition establishments. Simultaneously, this causes a comparative addition in the portfolios of recognition establishments portion of job assets, as accumulated in the period of recognition enlargement, every bit good as reflecting the deteriorating economic state of affairs of endeavors with stricter conditions to pull loans.
In this state of affairs, the province of the banking sector will impact the quality of the operation of interbank systems appraisal and hazard direction, including recognition hazard, liquidness hazard, market, operational and reputational hazards. Along with the care of liquidness of Bankss should pay attending to the care of capital adequateness, including those with extra investings of proprietors and new investors.
In order to cut down the negative impact of international fiscal convulsion on the economic system and fiscal markets, Russia is implementing a set of steps for the partial replacing of the retired recognition resources of Bankss and the Restoration of normal recognition rhythm. These steps aim to avoid systemic menace to the stableness of the banking sector.
As portion of the direction of liquidness of the banking sector, Bank of Russia will go on to better the conditions of entree to recognition establishments for refinancing instruments, which should assist cut down dealing costs and market hazards. With farther development of the domestic fiscal market, its substructure, it will lend to more efficient reallocation of financess in the economic system.
Decisions on the usage of tools to supply and absorb the liquidness will be taken depending on the kineticss of cardinal macroeconomic indexs and fiscal market conditions. If necessary, the Bank of Russia may use compulsory modesty demands as a direct tool for modulating liquidness in the banking sector.
Bank of Russia will take part in making the necessary conditions of an institutional nature, heighten the deepness and liquidness of the Russian fiscal market and accomplish growing in the efficiency of its involvement policy is to better the direction of liquidness in the banking sector, to develop a system of analysis of pecuniary policy, macroeconomic mold and prediction.
Particular importance attaches to the Bank of Russia constructing public assurance in the enforced pecuniary policy, increase its openness and transparence, and public instruction of its ends, aims and steps adopted. [ ]
The whole universe is now literally hectic from the word “ crisis ” . It is called the banking crisis, fiscal crisis, economic crisis of 2008, the planetary crisis and the crisis in Russia. Media throws more and more negative information, with each go throughing twenty-four hours analysts ‘ prognosiss become more intimidating. Today the words “ fiscal crisis ” on the lips of non merely concern proprietors, top directors, but besides among ordinary workers.
Economists have different sentiments, anticipations, advice on get the better ofing the crisis. After analyzing the positions of assorted experts and specializers, we can reason that the purchase of the fiscal crisis served as a mortgage crisis in the U.S. , it will last at least 2-3 old ages, the chief blow in the spring-summer 2009. The crisis is characterized by a important bead in workers ‘ rewards, mass decrease, jobs of employment, deficiency of demand alumnuss.
Every crisis has a positive side in the sense that people seek to understand what happened, to alter something the better, acquire a lesson and addition wisdom. Harmonizing to Anatoly Aksakov, president of the Russian Association of Regional Banks, “ every crisis – an nonsubjective phenomenon that can be sporadically repeated, and frequently let the economic system to better, acquire rid of ballasts that do non give her energy and develop harmoniously. ”
In decision I would wish to observe that, most likely, a serious break to the substructure that the fiscal, that the industry in approaching twelvemonth will non go on, and this means that all the tendencies that have occurred in a water under the bridge twelvemonth, will go on their smooth development. At the same cardinal elements that determine the class of events for specific companies, will be four chief procedures:
– Trouble in pulling and puting investings ;
– The beginning of the devastation of the “ in-between ” category and the relevant issues in the selling policy of virtually all fabrication companies ;
– A cardinal alteration of direction and managerial policies ;
– Addition in bad debts and an inability to obtain a normal loan.
It is these jobs ( possibly in a different order ) base in forepart of about any company that wants to successfully go on its activities in crisis. And merely those who can work out these jobs will profit.