The Bank of Russia Announces a Number of Changes

On 25 November 2011, the RF Central Bank announced its decision that, from 5 December 2011 onwards, the minimum credit rating threshold established for an issuer of securities, so that those securities could be entered on the Mortgage List of the Central Bank of the Russian Federation, is to be lowered.


On 25 November 2011, the RF Central Bank announced its decision that, from 5 December 2011 onwards, the minimum credit rating threshold established for an issuer of securities, so that those securities could be entered on the Mortgage List of the Central Bank of the Russian Federation, is to be lowered.

Also, from 1 December 2011 onwards, no discounts will be used when calculating the collateral value of direct repo transactions, of up to 6-calendar-day duration, with federal loan bonds and bonds issued by the Bank of Russia. Finally, from December 2011 onwards, the adjustment coefficient used for adjusting the value of the federal loan bonds accepted as collateral for credits granted by the Bank of Russia will be raised from 0.98 to 1.

 

All these decisions are aimed at expanding the opportunities for commercial banks to attract refinancing funds from the Bank of Russia.

 

It should be reminded that, as the situation in world financial markets has been steadily worsening since the end of the summer due to the aggravation of debt-related problems in developed countries, Russian banks has increased the volume of funds attracted from the RF Ministry of Finance and the RF Central Bank. This growth in demand for funds from these sources has also been induced by stabilization of the current account surplus of the RF balance of payments and by the RF Central Bank's policy aimed at reducing the scope of interventions on the foreign exchange market. As a result of these factors, money base growth caused by the Bank of Russia's purchases of foreign exchange has considerably decelerated.

 

When the occasion requires, the adopted measures will make it possible for Russian banks to attract a large volume of funds from the Central Bank. For example, this need may arise if the situation in financial markets continues to worsen.

 

P. V. Trunin, Candidate of Economics, Head of the Monetary Policy Department