Who Will Ensure Bank Deposits?

Russia has reached the stage when the problem of guarantess on people’s deposits is especially pressing
The Russian bankers are obviously dissatisfied with their obligation to ensure bank deposits of the Russian population. The RF Government has been actively persuading the banks of this necessity, and the latter finally yielded to the cruel necessity. However, the problem of ensuring people’s money still cannot be considered as settled. Moreover, recently, Russia’s principal deposit holder, Sberbank, criticized this new legislation of the Russian government. As it is stated in the new legislation, Sberbank depositors should ensure the deposits of commercial banks. It was also suspected that the Russian banking community would finally shift the responsibility for deposits onto the state once again; it was even supposed that, most likely, some special items in the state budget would be provided for this purpose, or something of this kind. However, as it turned out, the budget can’t cope with such load, which also means that guarantees of people’s deposits are once again somewhat vague.

The Central Bank of Russia was involved in the development of the system of guarantees for deposits from the very beginning. At that, a variant of the legislation suggested by the government was at first criticized by the Central Bank representatives; later, recommendations of the Central Bank concerning the problem were taken into consideration during the development of the legislation. To all appearances, there will be even more disputes concerning guarantees of people’s deposits. Director of the Central Bank department for bank regulation and control, Alexey Simonovsky told Russian journalists that the state budget of Russia must become the finite source of bank deposits guarantee in case of crisis situations. The information was reported by the Russian news agency RIA Novosti.

According to Alexey Simonovsky, a guarantee fund must be first of all formed with depositions of the state itself and assignments of the Russian banks as well. If a bank crisis occurs in Russia, the RF state budget must become the guarantor of people’s rights and deposits, in case if depositions of commercial banks won’t be enough to guarantee a part of peoples deposits.

According to the governmental legislation, the state in the person of the Agency for Restructuring of Credit Organizations (ARCO), will originally deposit 3 billion rubles into the guarantee fund. And each of the commercial banks allowed to work with people’s money will have to assign 0.6% of the amount of their deposits annually. Alexey Simonovsky is sure that a guarantee fund of 5 billion rubles is enough to provide real guarantees to Russian depositors. This sum can be easily accumulated within only one year since the guarantee system is established. However, the RF Duma strongly disagrees with the innovation suggested by the Central Bank. Chairman of the Duma committee for credit organizations and financial markets, Valery Zubov actively supports adoption of the government’s variant of the legislation. He thinks that it is a hard task for the state budget to guarantee deposits of the population. The deputy is sure that the budget won’t be able to cope with the problem of deposits’ guarantee if a crisis occurs. That is why he says that economic growth must become the principal guarantor of the people’s deposits.

You will certainly agree that the notion of economic growth is delicate and extremely vague. Especially that in some industries in several of the Russian cities the economic growth can be even negative. However, in the official reports of the RF Statistics Committee the negative economic growth will be compensated with the increase of oil and gas export, with the increase of currency proceeds at the world hydrocarbon markets. That is why someone more definite must guarantee people’s deposits, otherwise such guarantees can hardly be called guarantees at all.

Deputy Valery Zubov says the governmental legislation has some discrepancy connected with ARCO. To be exact, the discrepancy is that ARCO acts as a controller and as an insurer at the same time. In other words, the agency will deal with payments to depositors if an insurance occasion comes, will define the amount of insurance dues for banks, and will appeal to the Central Bank for control over some bank if its work is treated unstable. In addition, ARCO will demand that banks should provide accounts, the amount of which will be coordinated with the Central Bank. This, by the way, isn’t good by itself. The chairman of the Duma committee is sure that when the legislation is adopted, the guarantees of the fund and the budget will be given to all banks that accept deposits of the population.

To tell the truth, the serious problem of ensuring people’s deposits must be discussed in consent of all parties concerned, especially that the problem of people’s deposits has been topical within the past years of the Soviet era and already when the Russian Federation was officially declared. We mean the 1995 inter-bank crisis, when famous financial pyramids collapsed, and the 1998 default as well. However, the situation in Russia concerning people’s deposits is far from being a nation-wide consensus.

Russia has reached the stage when the problem of people’s deposits guarantee is especially pressing. However, key Russian figures connected with the problem still fail to settle the it. Instead, they rush into disputes, try to shift the responsibility onto somebody else, or even try to escape from solution of the problem. The situation will hardly come to a favorable result. Isn’t it wiser to wait a little with the adoption of the legislation on guarantees to people’s deposits? This time could be used to make all parties concerned with the problem reach consent in objectives and methods of people’s deposits guarantees.

Kira Poznakhirko PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: https://www.pravda.ru/economics/7811-bankcontribut/

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