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Central Bank of Russian Federation

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+ Central Bank of Russian Federation

According to the federal law the Central Bank of the Russian Federation (Bank of Russia) solves a number of the major economic problems. The Bank of Russia in interaction with the Government of the Russian Federation pursues the state monetary policy, regulates activity of the Russian and international banks, sets rules of implementation of calculations, controls currency transactions.

Role of the Central Bank in the treasurer system of the Russian Federation

Feature of a treasurer system is that at it budget implementation is performed not by the Central bank, but executive authorities. With transition to this system of function of bank were limited, however he reserved a number of important powers which cash budget implementation is among.

Organization structure of bank

Organizational structure of bank for October, 2013

Click on the image to increase it

In May, 2018 the Board of Directors of the Central Bank made the decision to separate Head department of security and data protection into two independent divisions - department of information security and department of security of the Bank of Russia.[1] the Department is created based on FinCERT (FinCERT).

Payment systems

Mir payment system

Main article: World (national payment system)

The platform for instant transfers of natural persons

The Bank of Russia intends to create the platform for instant transfers of individuals. The director of the department of national payment system Central Bank Alla Bakina reported about it in April, 2017 to Vedomosti.

It is supposed, Bakina told that a new system will allow to register payments for benefit of other natural persons and payment of goods and services. It is about payments for the amount to 100 thousand rubles, she specified.

Make payments, according to Bakina, it will be possible through mobile application or Internet services which will be integrated with the platform and, respectively, with Central Bank payment system which only banks at the moment can use.

Together with the Central Bank the organizations entering into Fintekh association work on creation of the platform for instant translations: Sberbank, VTB, Gazprombank, Opening, Alfa-Bank, NSCP and Qiwi.

The experts polled by Vedomosti specified that the new platform can create the significant competition to a translation service "Sberbank online". Besides, one of interlocutors of the edition noted, can negatively affect development of Mir payment system which was also created by the Central Bank.

Transactions of the Central Bank

Purchases and currency sales

To the middle of May, 2020 the Bank of Russia sharply reduced the volume of operations at the exchange on support of ruble exchange rate. On Thursday the Central Bank sold currencies for 11.4 billion rubles.

In comparison with the last week of April the Central Bank reduced support of ruble almost twice: then stuck to currency sales between 20.1-23 billion rubles a day.

The beginning of currency sales in connection with COVID-19 epidemic

The Central Bank completely suspended implementation of currency from NWF which received within the transaction on sale of a controlling stake of Sberbank to the government, and sells only a volume which is provided by the budget rule.

Since March 20 the Central Bank carried out additional interventions, compensating falling of Urals marks of $25 are lower. Above this level of quotation rose on May 5, however the regulator did not begin to reduce the volume of interventions, saving them higher than 20 billion rubles a day.

In fact the Central Bank transferred ruble to "manual control". He "sells currency, compensating a gap between $42.4 (stop-out price) and the current price (oil), and then, apparently, scatters these amounts between the budget rule and the transaction with Sber's actions", the director of analytical management of Loco-Invest Kirill Tremasov explains.

For April, 2020 the Central Bank sold in the market $3.6 billion, and since March 10 until the end of April - about $6 billion.

Gold purchases

Main article: Gold stocks of Russia

Transactions of a repo

The repo auctions are used by the Central Bank for injection of liquidity to the financial sector in case of the shortage of money at commercial banks. The tool is security sale during open tenderings with the obligation of their share repurchase through a certain term at higher rate. During transactions of a repo with banks of the Central Bank buys their bonds under certain percent.

Since fall of 2011 demand of commercial banks for this financial instrument shows stable growth that is explained by crediting falling from abroad. The last, in turn, is connected with debt crisis in Europe.

On June 9, 2012 the Bank of Russia set a limit of the repo week auctions at the level, record since the beginning of year, of 1.12 trillion rubles. The minimum rate on auctions will be 5.25 annual interest rates. At the same time auctions of a one-day repo were increased by 180 billion to 560 billion rubles. The minimum rate is saved at the same level, as for week[2].

The previous record on amounts of money which the Central Bank was ready to issue to banks was set on May 22. Then the regulator set a limit of the repo week auctions in the amount of 900 billion rubles with a minimum rate also in 5.25 annual interest rates.

Transactions at the exchanges

In the spring of 2012 the activity of the Bank of Russia at the exchanges considerably grew that also indirectly speaks about high demand among commercial financial structures on liquidity from the Central Bank. So, in May, 2012 the Bank of Russia made at the exchange of transactions for 7.4 trillion rubles that became an absolute record of the regulator since the beginning of its work on marketplaces. About a half of biddings on the Russian stock exchanges was the share of the Central Bank.

Control of exchange rate fluctuations

Till 2014 using a dual currency basket the Central Bank monitored currency rates. In case of need, to smooth effects of acute fluctuations of currency rates, the regulator can interfere with biddings at the Moscow Exchange. When the Central Bank accumulated on one of intervention corridor borders in 450 million dollars (till December 27, 2011 - 600 million dollars), borders of a corridor moved for 5 kopeks (governed for July, 2012).

Key interest rate

In June, 2020 the Central Bank of the Russian Federation lowered a key interest rate to 4.5%.

In April, 2020 the Bank of Russia lowered a rate by 50 percentage points up to 5.5%. At such level the cost of loans last time was in 2014.

Performance Indicators

2020: Loss of 182.5 billion rub

In 2019 the loss of the Central Bank of Russia made 182.5 billion rubles.

It is already the third in a row annual loss of the Central Bank. In total in three years the volume of losses exceeded one trillion rubles, however in the 2017th and 2018th the regulator lost much more, than in 2019 — 435.3 and 434.7 billion rubles respectively.

Last time the Central Bank got profit in 2016, it was 43.7 billion rubles. It is noted that such financial performance is connected with decrease in growth rates of economic activity.

It is also specified that the loss was affected by large-scale purchases of currency within the budget rule "preserving of structural surplus of liquidity of the banking sector".

As it is specified in the finance document, revenues of the Central Bank for 2019 were created in the amount of 630.79 billion rubles, expenses — in the amount of 632.663 billion, a financial result of activity before transfer of income gained from equity participation of Sberbank at the end of year — at the level minus 1.873 billion rubles. The indicator "the income gained from equity participation of Sberbank at the end of year and transferred into the federal budget according to federal laws" made minus of 180.696 billion. As a result the loss of reporting year reached 182.569 billion rubles.

In the report it is explained that "income and expenses of the Bank of Russia in 2019 formed under the influence of multidirectional factors. In the conditions of decrease in a key interest rate of the Bank of Russia in comparison with 2018 interest expenses on absorption transactions were cut down. As a result of growth of volumes of reserve assets of the Bank of Russia and resources of the national welfare fund of the Russian Federation placed on bank accounts of Russia income from placement of reserve assets of the Bank of Russia and expenses on resources of the national welfare fund of the Russian Federation respectively increased. Due to the change of structure and quality of assets of the Bank of Russia in 2019 there were net income from recovery of proviziya of the Bank of Russia (against net spendings on formation of proviziya in 2018). Also in 2019 expenses on replenishment of the pension fund of the Bank of Russia according to calculations of the independent actuary are made".

According to data of the report, assets of the Bank of Russia at the end of 2019 grew, having exceeded 40.513 trillion rubles against about 39.369 trillion the previous year (plus 2.9%).

2014: Net profit of 183 billion rub

The amount of net profit of the Central Bank of the Russian Federation at the end of 2014 increased by 42% in comparison with an indicator of year before last and was, according to preliminary estimates, 183 billion rubles. According to the Russian legislation, 75% of net profit of 2014, or 137.5 billion rubles, the regulator is obliged to transfer into the budget.

Information technologies in the Central Bank of the Russian Federation

Main article: Information technologies in the Central Bank of the Russian Federation

Development of innovations and financial technologies

Regulatory functions in the field of electronic payment systems

2019

Privileges to banks for collecting of biometric these Russians

On September 18, 2019 it became known of the solution of the Central Bank of the Russian Federation to provide to banks of a privilege in exchange for collecting of biometric these Russians. The corresponding draft of amendments is published on the regulator website. Read more here.

Control over operators of foreign payment systems

On March 12, 2019 it became known that the State Duma in the first reading accepted a packet of the bills including setting requirements to acceptance in the territory of the Russian Federation of electronic payment instruments and to functioning of foreign payment systems. Read more here.

Regulatory functions in the field of data protection in banks

Regulatory functions in the field of IT in banks

2019: A request of powers of certification center in the credit and financial sphere

On January 25, 2019 it became known that State Duma adopted in the first reading the bill allowing To the Central Bank to block the websites in Internet violating the law in the financial sphere. The document was developed in execution of the order of the President Russia Vladimir Putin.

The bill is amendments in the Law "About Information, about Information Technologies and Data Protection" and the Civil procedural code. Authors of the bill is a number of deputies and senators, including the speaker of the State Duma Vyacheslav Volodin, the head of the Council of Federation Valentina Matviyenko, the Chairman of the State Duma Committee on financial markets Anatoly Aksakov and others.

The document confers to the Central Bank powers on extrajudicial blocking of several categories of the websites. First of all, it is about the websites entering clients and partners of credit institutions (banks) and non-credit financial institutions into delusion concerning accessory of information distributed in the Internet. Including the websites with similar domain name, registration and maintenance will fall under blocking.

Also under blocking the websites connected with the offer and providing in the territory of Russia of the financial services defined in the Law "About Protection of the Competition", the persons who do not have the right to render them in compliance with the Russian legislation will get.

One more category of the websites which will fall under prohibition is financial pyramids. In the bill they are described as resources, "connected with implementation in the territory of Russia of activities for attraction of money and other property of physical persons and legal entities at which payment of income and providing other benefit to persons whose money and other property are attracted earlier, are performed at the expense of borrowed funds and other property of other physical persons and legal entities in the absence of the investment and other legal business or other activities connected with use of borrowed funds and other property".

Introduction of a separate locking gear of the websites, "the credit institutions and non-credit financial institutions allowing to provide illegal access to information systems, to the electronic payment instruments and engineering devices of their clients used during the providing financial services or information necessary for its receiving using information and telecommunications networks" is supposed.

Illegal access to confidential information on clients of financial institutions also falls under this formulation. So it is, in particular, about the phishing sites abducting data of clients of banks and payment systems for cracking of their accounts.

But for blocking of such resources the Central Bank will need to file to Moscow City Court a petition for protection of the rights, freedoms and legitimate interests of the indefinite group of people. The Moscow City Court will consider such cases as the first instance.

The order of hearing of cases about blocking of such websites will be similar to an order of blocking of piracy resources. The Central Bank will transfer to Moscow City Court the statement in electronic form for access lock to this or that resource. The Moscow City Court can take out determination about introduction of provisional interim measures concerning an appropriate resource.

After that Roskomnadzor will provide to the owner of a resource and its hosting provider there are three days on deleted controversial information, otherwise access to it will be blocked from the territory of Russia. In return, to the Central Bank will have to submit within 15 days to the owner of a resource a full claim to Moscow City Court, otherwise preliminary security will be terminated and the website will be unblocked.

Authors of the bill specify that for January, 2019 increase in scales of use of the Internet for commission of fraudulent activity in financial market is noted. At the same time one of the purposes of the Central Bank is protection of the rights and legitimate interests of citizens - consumers of financial services, prevention of real financial loss as a result of use of the websites containing illegal information and also increase in trust to activity of financial institutions and financial the market of Russia in general.

In case of approval the law will become effective only in 180 days after its acceptance as time will be necessary for acceptance by the government corresponding subordinate.

The CEO of Deep forest hosting provider Philip Kulin considers that blocking of fraudulent websites is the only type of blocking which should be applied on the Internet.

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I as hosting provider, itself, without any legal basis, I consider anonymous complaints and block fraudulent websites, as well as the websites extending spam.
Philip Kulin, the CEO of Deep forest hosting provider[3]
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2018: Powers of certification center in the credit and financial sphere

According to the message of December 6, 2018 the Bank of Russia took the initiative to undertake powers of certification center in the credit and financial sphere by the electronic signature.

Let's remind that the certification center is intended for release of certificates of keys of check, the strengthened qualified electronic signature and also ensuring the legal importance of electronic document management according to requirements of the legislation of the Russian Federation.

The head of Project office of program implementation "Digital economy" Vladimir Mesropyan reminded that for December, 2018 powers of certification center are stated in the legislative initiative of the Ministry of digital development, communication and mass communications of the Russian Federation (Ministry of Telecom and Mass Communications). According to the bill individuals receive the electronic qualified digital signature in the state and private certification centers, legal entities receive the electronic digital signature which can confirm remotely their decisions on transactions, in certification centers of FTS, and representatives of public authorities - in certification center of Federal Treasury of the Russian Federation.

The deputy head of department of methodology and standardization of information security and cyberstability of Department of information security of the Bank of Russia Olga Krayeva took the initiative to give to the Central Bank authority of certification center in the credit and financial sphere. It means that the Central Bank can take away a part of legal entities from FTS.

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The big concern to us is caused by a time log when we cannot quickly send information to tax for a withdrawal of the certificate, it happens in cases to time input of administration in banks and making decision on blocking of all information in a payment system of the Bank of Russia. If the withdrawal of the certificate at the head of credit institution and the chief accountant does not occur instantly, then there is a risk of funds withdrawal. Respectively, we actually in the bill create the fraudulent scheme, and the Bank of Russia cannot support such offer. Therefore we suggest to give to us authority on creation of certification center in the Bank of Russia that we in the moment could withdraw certificates.
Olga Krayeva, deputy head of department of methodology and standardization of information security and cyberstability of Department of information security of the Bank of Russia
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Moreover, in the Central Bank understand that FTS will not be able to undertake all risks in case of an extreme situation in the financial sphere. Besides, Olga Krayeva doubts that the Russian budget will cover those losses which are incurred by investors and consumers of financial services[4].

2015: Privilege elevation of the Central Bank to the requirement of copies of databases at banks

On November 20, 2015 it became known that the Central Bank (CB) of Russia will have more opportunities to require backup copies of databases from credit institutions. Thanks to it the regulator will be able to reduce the probability of loss of information which banks should transfer it.

As reported on the website of the Government of the Russian Federation, the commission on lawmaking activity approved the changes in the law "About Banks and Banking Activity" assuming expansion of the list of the bases for the direction of the Central Bank in banks of requirements about creation and transfer on storage of backup copies of databases.

Banks will transfer copies of databases to the Central Bank
"Adoption of the bill will promote decrease in probability of loss of information which is subject to storage and transfer by credit institutions to the Bank of Russia. It will allow to make more transparent activity of credit institutions, to increase safety of assets of the liquidated credit institutions", the document says.

The amendments the law drafted by the Ministry of Finance of the Russian Federation should reduce the probability of destruction of information by banks shortly before a withdrawal of their license.

In particular, the Central Bank can request from financial institutions backup copies of electronic databases in case of input of restrictions for acceptance of means in deposits and other transactions. Blocking of separate transactions is already more widespread practice, less stressful for bankers, and they will not start destroying archives, calculate in the Ministry of Finance.[5]

History

2020

U of 100 employees of the Central Bank of the Russian Federation detected a coronavirus

On May 8, 2020 it became known that approximately at 100 employees of the Central Bank of the Russian Federation COVID-19 coronavirus is revealed. The majority of infected work in Moscow, the chairman of the Central Bank Elvira Nabiullina reported at a press conference.

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We have a big organization and therefore, unfortunately, cases are — she told, answering a question whether there are positive results among tests for a coronavirus among personnel of the Central Bank.
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Approximately at 100 employees of the Central Bank of the Russian Federation COVID-19 is revealed

According to her, the Bank of Russia tests workers for a coronavirus. The head of the Central Bank added that by May 8, 2020 about 80% of staff of central office work remotely, in regions — about 60-65%. Besides, the regime of the shift work isolated including from the outside world is introduced.

As note Vedomosti, in connection with spread of a coronavirus of new type Elvira Nabiullina weekly holds press conferences. On them she tells how the regulator assesses the current situation and what is undertaken for mitigation of the consequences of a pandemic.

By May 8, 2020 the coronavirus of COVID-19 diagnosed for 187,859 residents of Russia. Among them there are bank workers. So, in VTB Group 120 cases of infection with a coronavirus at employees are registered, the board member of bank Dmitry Pyanov told on May 8, 2020 journalists.

According to him, most of the infected employees of credit institution houses are treated. One of infected died.

Due to COVID-19 coronavirus pandemic the Russian banks began to undertake measures for fight against spread of an infection. In particular, at offices the requirement for social distancing, including for clients was introduced. Employees oblige to carry out disinfection, including during the work with documents. Also banks create interchangeable employee groups which ensure smooth operation with physical persons and legal entities.[6]

Ex-employees of the bank of Russia are sent to prison for plunder of 585 million rubles

At the end of April, 2020 the court pronounced verdicts on two former employees of Head department of the Bank of Russia across Central Federal District on Alexey Batrakov and Dmitry Kapriyelov and also two bank ex-presidents "The dynamic systems" (DS-bank) of Igor Sinyukhin, Fyodor Tsyrulnik and their accomplices. They were accused of plunder of 585 million rubles. Read more here.

Sale of 50% of stocks in Sberbank to the Government of the Russian Federation for 2.14 trillion rub

On April 10, 2020 the Ministry of Finance of the Russian Federation announced purchase of 50% of ordinary shares of Sberbank from the Bank of Russia at the expense of resources of the national welfare fund. The transaction is performed at the weighted average price of biddings at the Moscow Exchange from March 9 till April 7 which made 189.44 rub for one action. Transaction amount — about 2.14 trillion rub. The Central Bank specified that purchase and sale agreements were signed on April 8, and on April 10 stocks were transferred to the Government of the Russian Federation.

In ownership of the Central Bank there was one more ordinary share of Sberbank which will be transferred no later than May 6. Preserving of this action at the Bank of Russia is necessary for the conclusion of the shareholders' agreement, explained in the Central Bank.

On March 10, 2020 the Deputy Minister of Finance Vladimir Kolychev responsible for this transaction called circumstances for purchase of Sberbank the good moment. This day stocks of Sberbank fell in price almost by 9% against the background of the general collapse of the stock market after failure of the transaction on restriction of oil production of OPEK+. Next day the Finance Minister Anton Siluanov said that the deal can be closed in one tranche, and did not exclude its end in April. "We intend not to shelve therefore as soon as the legislation is accepted, we will quickly close this deal" — mister Siluanov (the quote by TASS) told. He noted that the National welfare fund forms in currency and in ruble expression reserves became higher. "Therefore we calculate what at us will be enough financial resources to perform this transaction in one step" — he explained[7].

At the beginning of April the Ministry of Finance announced that in March it converted resources of the national welfare fund (NWF) in the amount of $8.67 billion, €7.92 billion and £1.6 billion into 1.49 trillion rub for the purpose of acquisition of ordinary shares of Sberbank.

Educational portal

The Bank of Russia since August 31, 2017 started the information and educational fincult.info Internet resource designed to raise financial literacy of Russians.

Notes