Central Bank Eases Ruble Operations for Nonresidents
// Currency regulation
Yesterday, the Central Bank published new regulations for fund reservations in ruble operations by nonresidents. As a result, the conditions for working with the Russian currency have been simplified for them, while Russian participants will acquire additional liquidity. However, bankers expect more of a psychological, rather than an economic effect from this measure.
Vestnik Banka Rossii (Bank of Russia Herald) yesterday published Central Bank Instruction No. 1540-U, according to which the fund reservation requirements for a number of ruble operations by nonresidents have been reduced. Thus, for operations with nongovernment bonds and for granting loans to nonresidents (accounts O and V2), the reservation rate has decreased from 3 to 2 percent. For passing funds to accounts for operations with government bonds (account type S), the reservation is reduced from 20 to 15 percent. And for crediting of a nonresident by a resident (through account type V1), the reservation is halved, from 50 to 25 percent.
According to an Interfax report, Konstantin Korishchenko, the vice chairman of the Central Bank, noted that the instruction was issued “within the framework of planned measures aimed at full liberalization of the Russian currency market, which must start on January 1, 2007.” According to Central Bank data, at present, there are several tens of billions of rubles in reservation accounts. As Korishchenko noted, “the decrease in reservation rates reduces these balances. This money can now enter the debt market.”
Bankers surveyed by Kommersant said that the decrease in reservation rates was undoubtedly a positive feature. Tatyana Sharova, the chief accountant at Orges Bank, notes that the measures adopted by the Central Bank are primarily aimed at stimulating nonresidents' operations with Russian securities and ruble loans. “There was no economic sense in overnight ruble transactions between a nonresident and a resident bank. Now Russian banks will have access to the rubles of nonresidents,” says Sergey Romanchuk, the head of the conversion operations department at Metallinvestbank.
At the same time, bankers note that there are unresolved problems, in particular the retention of relatively long reservation periods, which lead to paradoxical situations. At present, a nonresident who grants credit to a resident for a period of less than three years must reserve funds for a period of a year. But after granting credit for six months and getting his money back, the nonresident is forced to hold the reserve in the Central Bank for another six months. In the words of Aleksandr Lomov, vice president of Probusiness Bank, “not surprisingly, in order to exclude reservation altogether, market participants are concluding agreements among themselves for more than three years, but with the right to advanced repayment of credit.” Furthermore, Alla Bakina, the head of Rosbank's currency control department, notes that authorized banks with the right to manage special accounts are faced with one difficulty. They are obligated to return clients' money no later than the next working day after receiving applications from them. “At the same time, the authorized bank itself must obtain money from the Central Bank, but it has no established periods for returning money,” Bakina notes.
Evgeny Nadorshin, an economist at Trust Bank, expressed a common opinion. “The effect of these actions of the Central Bank will be fairly moderate.” The Central Bank is also inclined to a similar opinion. According to Korishchenko, “the effect of these decisions will probably be of a psychological nature.” In his words, “the less operations connected with the movement of capital are restricted, the freer financial markets are for it and the more calmly Russian and foreign investors can work on it and plan their operations without significant additional expenses.”
Kirill Yacheistov, Aleksey Baibakov
All the Article in Russian as of Feb. 10, 2005
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