The RF CB suspends its lending auctions
On 1 July, 2010 the Bank of Russia announced that from 1 October 2010 it would suspend its auctions for granting unsecured loans to credit institutions for a period of over 5 weeks, and from 1 January 2011 – for all periods.
Thus the RF CB continues its course aimed at curbing the anti-crisis measures designed to support the country’s financial system. At the same time, it is noteworthy that in this particular case the RF CB is not trying to influence the course of events but rather follows the market. It should be reminded that while in the acute phase of the crisis the volume of debt against unsecured loans was almost as high as 2 trillion Rb, as of 1 July 2010 this index amounted to only 50 billion Rb.
Evidently, only those credit institutions that are still experiencing some serious problems have their loan redemption payments in arrears. However, these problems must now be dealt with by some other means, because unsecured loans represent an anti-crisis support measure that during a period of normal development may give rise to some unacceptably high risks associated with unfavorable selection and dishonest behavior.
P.V. Trunin – Candidate of Economic Sciences, Head of the Department for Monetary Policy