Russia » Economics

Russian bank crisis in progress

The crisis situation in Russian bank sector caused rapid growth of the US dollar exchange rate.
Investors are purchasing the US currency. According to the Kommersant, on July 8 the dollar reached the price of 29.15 roubles, but later fell down to 29.12 roubles per dollar. Тhere have not been such prices since the beginning of January.

MasterCard blocked operations on cards of Guta-Bank, Paveletsky bank, Sodbusinessbank and Credittrust, the press department of the international pay system reported.

The measures of Russian Central Bank will not settle the complicated situation in Russian bank sector, President’s advisor Andrei Illarionov believes.

"Reducing the amount of mandatory deductions to the reserve fund, increasing control over the banks, involving accounts of all the banks in the insurance system, increasing the state control over the banks – all this will just aggravate the crisis”, said Mr. Illarionov on Thursday.

He is concerned that reducing deductions to the Reserve Fund will increase free money flow on the market and this will speed up inflation. “The state’s actions teach Russian citizens not to believe the authorities again”, said the President’s advisor. He thinks that the best way to avoid bank crisis is liberalization of the entire bank system, state’s withdrawal from it and letting big foreign financial players in the Russian financial market.

Meanwhile, former government official, Deputy Director of Russian Aluminum company Aleksander Livshits said that the situation around Russian banks can stabilize in 2 weeks. He believes that the efforts of the government, Central Bank and shareholders of private banks can solve the problem.

“The measures taken by Central Bank – guarantees for bank accounts and purchasing Guta-bank by Alpha-Bank – are sufficient”, Alexander Livshits said.

He believes that the situation in Russian bank sector can hardly be called a crisis. If this is a crisis, it is a very strange one. “When the crisis takes place – inflation grows, economics goes down and Central bank is short of reserves. Now we have absolutely different situation”, said Mr. Livshits. According to him, after the problem is solved, Russian state banks will become stronger (although they are strong enough), foreign banks will improve their positions as well, but the rest of the banks will become weaker. Mr. Livshits believes that there are too many small banks in Russia, finally they go bankrupt and pose danger to the other banks.

Source: Russian media

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