The Central Bank of the Russian Federation is useful, banks are stable

Participants of the V Russian Economic Congress assessed the effectiveness of the anti-crisis measures taken by the Central Bank of Russia as useful. The domestic banking system was called the “strongest link” of the economy after the real estate market.

At the roundtable, speaking on the issue of anti-crisis measures of the Central Bank of Russia, the majority of participants positively assessed the actions of the financial regulator in the last decade. Firstly, the “cleansup” of the banking sector during the crisis of 2014-2015 had a positive effect. The system has strengthened and gained stability. Secondly, during the 2020 pandemic, measures of supporting and preferential lending to the economy carried out by the Bank of Russia have opened access to financial resources, mainly for stable and efficient companies. Unlike its Western counterparts, the domestic banking system has not spent significant funds on supporting chronically unprofitable “zombie firms.” Thirdly, during the 2022 crisis caused by sanctions pressure, the Bank of Russia used all possible means to support the country’s financial system, and even went for relaxing capital adequacy requirements.

This circumstance incurred  displeasure of the chief analyst of Sberbank PJSC, Candidate of Economic Sciences Mikhail Matovnikov:

“It makes sense to continue the cleanup of the banking sector; the Bank of Russia must not weaken its control and get private banks unleash. Perhaps for the first time in several decades of economic development, we can say that the Russian banking system has turned from a “weak link” of the economy into a “strong link”. Any relaxation impairs credibility of the banking system as a whole.”

Professor of the Russian School of Economics, Anna Obizhaeva, believes that the Central Bank of the Russian Federation has gained unique experience in dealing with all types of possible crises within the last ten years and has successfully overcome all “economic shocks.” In her opinion, the flexibility that the regulator shows in the banking sector can be explained by the intention to maintain lending volumes during a crisis, and there is nothing doubtful about this .

Discussing the issue of increasing the key rate of the Bank of Russia, the participants refrained from making unambiguous statements, pointing out that similar actions in 2014 ultimately could be assessed as “rather positive”. The moderator of the roundtable, Professor of the Russian School of Economics, Evsey Gurvich, recognized the discussion as interesting and frank.

Participants of the V Russian Economic Congress assessed the effectiveness of the anti-crisis measures taken by the Central Bank of Russia as useful