Transition to a sovereign monetary policy ⇐ ПредыдущаяСтр 22 из 25Следующая ⇒ To ensure expanded reproduction, the Russian economy needs a substantial increase in the monetization level, with expansion of credit and the capacity of the banking system. Urgent measures are needed to stabilize it, which requires an increase in the supply of liquidity and activation of the Central Bank function as the lender of last resort. Unlike economies of the countries issuing reserve currencies, the main problems in the Russian economy are caused not by the excess of money supply and associated financial bubbles, but by the chronic under-monetization of the economy, which for a long time has been overtaxing itself due to an acute shortage of loans and investments. The level of money supply necessary to raise investment and innovation activity should be determined by the demand for money from the real sector and governmental development institutions with the refinancing rate having regulatory value. At the same time, the transition to inflation targeting should, firstly, meet the declared goal in the composition of macroeconomic policy tools and measures, and secondly, should not leave other goals in the cold, including ensuring a stable ruble rate, and a growth in investment, production and employment. These goals can be ranked in priority and be set as restrictions, being achieved through the flexible use of the state's available monetary, credit and currency sphere regulation tools. In the prevailing conditions, priority should be given to increasing production and investment within the established limits on inflation and the exchange rate of the ruble. At the same time, in order to keep inflation within the established limits, a comprehensive system of measures is needed in respect of pricing and price policy, currency and banking regulation, and competition development. It follows from the theory of economic development and the practical experience of developed countries that an integrated approach is needed to the formation of money supply, coupled with the goals of economic development and relying on domestic sources of monetary issue. The most important of these is the mechanism for refinancing credit institutions, locked on lending to the non-resource high-tech sector of the economy. This can be done by applying well-known and proven practices of developed countries in indirect (refinancing against security of state obligations and solvent enterprises) and direct (co-funding of state programs, granting of state guarantees, funding of development institutions) ways of monetary issue. We should also not rule out the possibility of directing monetary issue to state needs, as it is done in the U.S., Japan and the EU through acquisition of government debt instruments by central banks. The establishing of a modern national credit and financial system adequate to the tasks of raising investment activity in order to modernize and develop the Russian economy is of key importance. The experience of countries that have worked an economic miracle shows that the rate of accumulation necessary for an economic breakthrough should be at least 35% (Table 10).   Table 10. Accumulation rate increase during economic breakthrough periods (Source: Y.M. Mirkin, IC Eurofinance)   Year	Investments / GDP, %
Japan	South Korea	Singa-pore	Malaysia	China	India
1950	x	x	x	x	x	10.4
1955	19.4	10.6	x	9.2	x	12.5
1960	29.0	11.1	6.5	11.0	x	13.3
1965	29.8	14.9	21.3	18.3	x	15.8
1970	35.5	25.5	32.6	14.9	x	14.6
1975	32.5	26.8	35.1	25.1	x	16.9
1980	31.7	32.4	40.6	31.1	28.8	19.3
1985	27.7	28.8	42.2	29.8	29.4	20.7
1990	32.1	37.3	32.3	33.0	25.0	22.9
1995	27.9	37.3	33.4	43.6	33.0	24.4
2000	25.2	30.0	30.6	25.3	34.1	22.7
2005	23.3	28.9	21.3	20.5	42.2	30.4
2009	20.6	29.3	27.9	20.4	46.7	30.8
2010	20.5	28.6	25.0	20.3	46.1	29.5

Russia 20%

At the same time, in the absence of sufficient internal savings, the main source of investment activity funding shall be a multiple credit expansion arranged by the state (Table 11).

 

 

Table 11. Scope of economic breakthrough crediting

(Source: Y.M. Mirkin, IC Eurofinance)

Year	Internal credit / GDP, %
	South Korea	Singapore	China	Hong Kong	India
1950	x	x	x	x	15.6
1955	x	x	x	x	18.9
1960	9.1	x	x	x	24.9
1963	16.6	7.2	x	x	25.8
1970	35.3	20.0	x	x	24.8
1978	38.4	30.7	38.5	x	36.4
1980	46.9	42.4	52.8	x	40.7
1990	57.2	61.7	86.3	x	51.5
1991	57.8	63.1	88.7	130.4	51.3
2000	79.5	79.2	119.7	136.0	53.0
2009	109.4	93.9	147.5	166.8	72.9
2010	103.2	83.9	172.3	199.0	76.2

Russia 45%

For that to happen, the following set of measures is proposed.

1. Adjustment of the monetary system for development goals and expansion of lending opportunities for the real sector.

1.1 Legislative inclusion in the list of objectives of the state monetary and credit policy and the activities of the Bank of Russia of creating conditions for economic growth, increasing investment and employment.

1.2 Transition to regulation of the money supply by setting the refinancing rate with a monetary issue primarily for the refinancing of commercial banks against security of credit claims to manufacturing enterprises, bonds of the government and development institutions. For this purpose, the refinancing rate should not exceed the average rate of return in the investment complex net of the banking margin (2-3%), and maturity of loans should correspond to the typical duration of the research and production cycle in manufacturing industry (up to 7 years). Access to the refinancing system should be open to all commercial banks on universal terms, as well as for development banks on special terms corresponding to the profile and objectives of their activities (taking also into account the expected return on investment in infrastructure – up to 20-30 years at 1-2%).

1.3 A radical expansion of the Lombard list of the Central Bank, including in it promissory notes and bonds of solvent enterprises operating in priority areas, of development institutions, guarantees of the federal government, federal entities and municipalities.

1.4 To avoid encouraging the export of capital and foreign exchange speculations, the acceptance of foreign securities and foreign assets of Russian banks as security for lombard and other loans of the Central Bank should be stopped.

1.5 Substantial increase in the resource potential of development institutions due to their funding by the Central Bank for investment projects, approved by the government in accordance with established priority areas of development. Development institutions should place such loans on the basis of targeted lending for specific projects, ensuring the allocation of money exclusively for the costs they set, and without transferring money to the borrower's account.

1.6 In order to ensure stable lending conditions, commercial banks should be forbidden to revise the terms of loan agreements unilaterally.

1.7 The standards for appraising collateral should be changed using weighted average market prices for the medium term and limiting the application of margin calls. This should include waivers of margin calls against borrowers from the Bank of Russia and banks with public ownership.

2. Necessary conditions should be created for increasing the capacity of the Russian monetary and financial system.

2.1 There should be a gradual transition to use of the ruble in international settlements for trade transactions of state corporations, with consistent replacement of their foreign-currency loans with ruble credits issued by state-owned commercial banks, ensuring provision of appropriate funding from the Central Bank.

2.2 In order to ensure stability of the ruble exchange rate, the range of tools for regulating the supply and demand of foreign currency should be extended by allowing export duties collection in foreign currency, with its accumulation in the government's foreign currency accounts in the event of an excessive currency supply, with the Bank of Russia introducing a regulation for the mandatory full or partial sale of exporters' currency revenues in the domestic market in case of its insufficient supply.

2.3 Exchange rate quotes should be established binding them to the ruble, and not to the dollar and the euro, as is currently the case. The boundaries of fluctuations in the ruble exchange rate should be establishment as previously announced and maintained for a long time. If there is a threat of going beyond the borders of the corridor, a one-time rate change should be applied to avoid provoking an avalanche of capital flight and currency speculation against the ruble, as well as to ensure instant rate stabilization.

2.4 In order to prevent the cross-flow of money issued to refinance production activities and investments to the financial and foreign exchange market, it is necessary to ensure the targeted use of such loans through appropriate banking supervision standards. Changes in the foreign exchange position of commercial banks that resort to refinancing of the Central Bank should be limited. To restrict financial speculations, the system of financial leverage regulation should be expanded by including non-bank companies in it.

2.5 The Eurasian Economic Union's payment and settlement system should be created on the basis of the CIS Interstate Bank with its information exchange systems between banks, credit risk assessments, exchange rate quotes.

2.6 MOEX should be returned under the control of the Bank of Russia. It should be transformed into a non-profit organization operating to ensure a stable and transparent functioning of the monetary and financial market.

3. Stabilization of the banking system.

It is necessary to take the following measures to eliminate the banking system destabilization threats arising from the chain of bankruptcies of commercial banks, the licenses of which are being canceled.

3.1 Commercial banks should be given a possibility of immediate getting of stabilization loans to meet panic claims of individuals in the amount of up to 25% of the volume of private deposits.

3.2 The Bank of Russia should resume unsecured loan auctions for creditworthy banks experiencing a liquidity deficit.

3.3 Urgent measures should be taken to maintain the current liquidity of banks, including reduction of allocations to the Mandatory Reserves Fund, increasing the ability of banks lending against security represented by non-marketable assets, expanding the diversity of such assets. If necessary, diminishers should be applied when calculating the value of risk-weighted assets for Russian enterprises rated by Russian rating agencies. The transparency and automation of financial assistance mechanisms should be provided.

3.4 A formation methodology should be developed and the list of strategic enterprises should be determined, the loans of which will be refinanced on a preferential basis.

3.5 Attempts of a number of commercial banks to provoke a banking panic to entice clients should be firmly suppressed, with criminalization of such actions.

3.6 Introduction of the Basel III standards in Russia shall be postponed for 2-3 years, until recovery of the scope of lending to the real sector at the pre-crisis level of the first half of 2008. The Basel III standards shall be adjusted to eliminate artificial restrictions on investment activities. Within the framework of Basel II, the calculation of credit risk shall be based on internal ratings of banks instead of ratings of international agencies, which revealed their incapacity and lack of professionalism during the financial crisis of 2007-2008.

In establishing the monetary policy, the Bank of Russia should evaluate the macroeconomic consequences of issuing rubles through various channels: for refinancing commercial banks against obligations of manufacturing enterprises, against bonds of the government and development institutions, for replacing foreign-currency loans, for purchasing foreign currency to foreign exchange reserves, for covering external ruble demand to credit foreign trade turnover, for capital operations and creation of ruble reserves of foreign states and banks. Methodological support of this work, including elaboration of simulated economic and mathematical models of monetary circulation, could be assumed by the RAS in cooperation with the research department of the Bank of Russia.

 

 

Promotion of Russia's

⇐ Предыдущая16171819202122232425Следующая ⇒

Поделиться: