Monetary policy and banks in Russia under the conditions of the international financial turmoil

1
Monetary policy and banks in Russia under the
conditions of the international financial turmoil
Garegin Tosunyan November 30th December 1st,
2008 First Session Russian Economic and
Financial Forum in Austria Vienna, Austria
2
Formula of financing the Russian economy
CB competitiveness of business ACR
availability of credit resources BPR basic
price of resources MP monetary policy BR
basic interest rate FR fund of reserves OMO
open market operations
3
CB f1 (ACR) 1

• Availability of credit resources should not
  become a competitive advantage,
• it is a competitive necessity.

Indicator Growth over 9 months of 2008 Growth over 9 months of 2007 lag
Loans to enterprises 29,1 35,8 - 6,1
Loans to the population 35,2 41,6 - 6,4

GDP 7,3 7,8 - 0,5
Investments in fixed capital 13,1 21,3 - 8,2
Industrial output index 5,4 6,6 - 1,2
4
ACR f2 (BPR) 2
5

• Under the conditions of the international
  financial turmoil most countries with substantial
• lending continue to stimulate economy by reducing
  discount rates.
• Russia, just the opposite, increases the
  refinancing rate regardless the small volume of
  lending and the slowdown of the economic growth.

6
BPR f3 (MP) 3
Source Bloomberg, Bank of Russia
7

• You have to dig a well before parched with
  thirst. Omar Hayam

8
Russia falls behind other countries by absolute
and relative indicators
11,7 ?
Russia has a crisis of underproduction
Source Bank of Russia, Deutsche Bundesbank, IMF
9
Russia falls behind many other countries in
mortgage lending despite high growth rates of
the market
? 53
10
Shortage of banks resources should be covered by
state funds
11
The influence of the crisis on the banking system
and the economy of Russia
International reserves of Russian Federation (
bln.)
In Sep.-Oct. the reserves have reduced by 19,1
Source Bank of Russia
the course of the crisis
12
It is essential to restore a complete banking
cycle
Main thing here is to recover confidence between
entities
Matter almost solved
Matter solved partially
Matter NOT solved
13
Basic macroeconomic and banking sector indicators
slow down
Indicator (bln. ) 1.01.08 Change in 9 months of 2008 Change in 9 months of 2007
Assets of banks 805,0 22,1 29,8
Equity of banks 106,8 17,9 47,8
Loans to entities 372,6 29,1 35,8
Loans to households 118,8 35,2 41,6
Deposits of households 206,4 14,2 21,9
Deposits of entities 282,1 27,4 34,5
Macroeconomic indicators Macroeconomic indicators Macroeconomic indicators Macroeconomic indicators
GDP 1319,5 7,3 7,8
Investments in fixed capital 196,3 13,1 21,3
Real income of the population 845,5 7,8 10,4
Inflation 11,6 9,3
14
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MICEX INDEX
Source Micex, RBC
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Assets growth rates slow downdue to resource
base deficit
YTD growth
16
Slowdown in the growth rate of resource base
affects the growth rate of personal loans
YTD growth
17
Growth rates of loans to entities reduce
YTD growth
18
Guaranties are the main way to reduce the
distrust at the market
In developed economies a substantial part of
governmental assistance are the guaranties
???????? ?????? ??????????? ???
19

• The measures taken by the State are of
  short-term character and will only help to get
  over current issues.
• In the midterm liquidity constraints may be
  deepened by the necessity of payments on foreign
  loans.

20
External debt of Russian Federation
bln.
As of 01.07.2008 Due Due Due Due
As of 01.07.2008 in the IV quarter of 2008 in the I quarter of 2009 Over 1 year Over 2 years
Total 527,1 43,3 27,1 156,8 243,2
External state debt 34,7 0,8 1,0 3,0 26,4
External debt of banks 192,8 16,5 11,8 60,0 69,1
External debt of corporations 295,5 26,0 14,3 92,9 147,7
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• Annex

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