Premier Fradkov not inclined to dramatize banking situation

The Central Bank of Russia is coping well with problems in the banking sector and quite a favorable situation is developing in this sphere," Prime Minister Mikhail Fradkov believes.

"It is good that the situation is on the whole quite favorable and the Central Bank with its colleagues is solving the issues, which have emerged today owing, perhaps, to some objective and subjective reasons," Mikhail Fradkov told a government session.

At the same time, the Premier pointed out that while building their policy in the banking sector, monetary authorities should take into account its sensitivity and its role in the country's economy and, therefore, develop and implement any steps very carefully.

Mikhail Fradkov reminded the Cabinet members that at its last session the government had approved a new strategy of the banking sector's development aimed at raising the sector's competitiveness, increasing its capitalization and improving the system of banking supervision.

"Efforts to stimulate the enlargement of banks by way of their voluntary amalgamation and merger, while maintaining a competitive environment, including on local markets, will be an important element of state policy towards credit institutions," the head of state said. According to him, the Central Bank and the government need a well-balanced, well thought-out and consistent policy. At the same time, the system of measures to streamline the banking sector must not create any instability largely prompted by psychological factors. This system of measures for the development of the banking sector must be predictable and transparent so that "healthy" banks should themselves be interested in putting things in order in the banking sector. In the opinion of Mikhail Fradkov, it is necessary to further analyze the situation in the sector and be especially accurate in the preparation of decisions to "make things better while doing no harm."