Government approves bank development strategy

The Russian cabinet of ministers approved the bank development strategy on Thursday.

Necessary amendments and adjustments expressed by cabinet members will be added to the strategy and plan of primary events in the next two weeks.

Summing up the discussion, Prime Minister Mikhail Fradkov said that Russia sees purposeful and systematic work on reforming and improvement of the banking system.

"We are very balanced and careful about this issue in order to prevent crises," the Premier noted.

He pointed out to the necessity to consider all issues of the financial market development.

"We need a systematic approach to make this sphere stable and predictable," Mikhail Fradkov stressed.

In his words, the National Banking Council can play an important role in this process. It should discuss strategic development of regional banks, financial markets, the Central Bank, the Finance Ministry, and the federal service for financial markets, the Prime Minister said.

The administrative reform in Russia should concern the Central Bank, he added.

"We should consider and add everything, which was omitted in this reform," Mr. Fradkov remarked.

According to Central Bank President Sergei Ignatyev, the bank is already working on the implementation of main principles of the administrative reform.

He is convinced that the Central Bank reform should not be reflected in the bank development strategy. This is a separate issue, he said.

Mikhail Fradkov agreed with Sergei Ignatyev adding that he wanted the Central Bank President's attitude to reforms.

Vice President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin raised the question of the Central Bank reform at the cabinet meeting. In his words, the basic principles of the administrative reform on the division of constitutive and supervisory functions did not extend over the Central Bank.

Mr. Shokhin believes that thegovernment should consider the introduction of collegial principles in bank supervision. A relevant service may comprise representatives of other departments.

Moreover, service functions should be separated from the Central Bank. For instance, the system of cash processing centers can be turned into an agency and privatized.

Bankers supported the bank development strategy.

According to President of the Russian Banking Association Garegin Tosunyan, the strategy takes into account their proposals. He also offered to boost the implementation of this strategy.

However, a number of important issues were not mentioned in the strategy, he said. Among them are the judicial protection of the forward market, realization of pledges and the expansion of the log-term resource base of banks.