Adjustment to sanctions, default risk and banking fees. The main thing from Nabiullina’s press conference

Bank commissions on foreign currency accounts will be checked, and their conversion into rubles is excluded. About this the head of the Central Bank of Russia Elvira Nabiullina stated June 10 at a press conference. RTVI gives its main theses.

All changes that banks make under existing contracts with individuals should not lead to a deterioration in the terms of service for customers, the head of the regulator emphasized.

According to her, in such cases, “increasing or introducing commissions would be a direct violation of the law,” but “you need to carefully look at the contracts” and deal with each specific bank that has made changes in this area. “If there are violations, we will apply measures,” Nabiullina promised.

Forced conversion of foreign currency savings on the accounts of Russians into rubles is excluded, she assured.

“As for conversions, we are not talking about any forced conversions,” the head of the Central Bank emphasized.

She explained that foreign exchange transactions are risky both for citizens and for the banks themselves, so they are trying to reduce their volume and “may even stop offering foreign exchange products.” In this case, the head of the Central Bank emphasized, it is important to respect all the rights of customers, so the regulator “keeps the situation under control.”

Commission for keeping funds in foreign currency accounts from June 23 introduces Tinkoff Bank. These changes, as specified in the credit institution, will affect accounts in euros, dollars, British pounds and Swiss francs in the amount of more than 1 thousand conventional units. The fee will be 1% per month, that is, 12% per annum, but will be charged daily. The need for these changes in the bank was explained by the “unreliability of foreign partners in working with currency.”

From June 30, commission for placing funds on current accounts in dollars, euros, pounds sterling, Swiss francs and Japanese yens announced and Raiffeisenbank. It will amount to 0.2% of the amount in the account, if it exceeds 5 thousand conventional units.

Effects of sanctions and adaptation to them

Western sanctions have not affected the Russian economy as sharply as the Central Bank predicted, but the situation is still unstable, also because the sanctions effect has not yet fully manifested itself, Nabiullina warned.

“We see that our exports have not declined as much as we initially expected. So far, perhaps, the effects of sanctions are less acute than we feared. This shows the ability of companies to adapt,” she said.

Downgrading key rate from 11% to 9.5% at today’s meeting, the Bank of Russia stated that “external conditions for the Russian economy remain difficult and significantly limit economic activity”, but compared to the regulator’s April forecasts, inflation is slowing down faster, and economic activity is declining less .

No risk of stagflation

The risk of stagflation is not included in the Central Bank’s baseline forecast for the Russian economy, Nabiullina said. According to her, the policy of the regulator “is aimed at ensuring that such a risk does not materialize.”

The term “stagflation” is formed by the fusion of the words “stagnation” and “inflation”. It is used to refer to a situation in which an economic recession and depression, stagnation, rising unemployment and rising prices are combined. The reason for stagflation is most often a decrease in production due to a jump in prices for strategically important raw materials (for example, a drop in oil prices for countries exporting it). In addition, stagflation can be provoked by an excess of money in circulation with too active state regulation of the labor market and production.

The risks of global stagflation like that of the 1970s were recently warned by the World Bank, which on June 8 released its revised growth forecast for the global economy. It contained statedthat due to the conflict in Ukraine and against the backdrop of continuing inflation growth in the world, central banks will be forced to tighten their financial policy, and this will create the risk of a “pronounced slowdown in economic growth.”

A fearless default

The inability to pay sovereign debt (that is, the risk of default) will not have any immediate impact on Russia, Nabiullina assured. According to her, there is no such threat:

“As a rule, the inability to pay sovereign debt leads to an outflow of investors, a decrease in the value of assets in this regard. But in the case of Russia, this did not happen, so no immediate consequences are expected. This whole situation does not have any effect on the fulfillment by the state of its obligations to Russian citizens, Russian residents who have bought federal loan bonds (OFZ).”

At the end of May, Bloomberg reported that on May 27, holders of Russian bonds did not receive coupon payments on debt securities totaling about $ 100 million. From that moment, as stated in the publication, for Russia 30 day countdown has begun: Either it will make a payment or it will default.

It is impossible to make payments on Russian Eurobonds due to the fact that the Office of Foreign Assets Control of the US Department of the Treasury (OFAC) refused to extend the license that expired on May 25, which allowed Russia to use dollar accounts for settlements on external debt.

Two IIS and a budget rule

The Central Bank supports the idea of ​​allowing Russian investors to hold two individual investment accounts (IIAs). “Such changes to the legislation must be adopted,” Nabiullina said. According to her, the draft law on the second IIS for investors affected by the transfer of assets between brokers is now being agreed with the government.

It is too early to talk specifically about the new budget rule, the head of the Central Bank of Russia is convinced. Now, according to Nabiullina, consultations are being held with the Ministry of Finance on this issue.

Until recently, the budget rule, designed to “cure” the economy from dependence on raw materials, provided for the replenishment of the National Wealth Fund (NWF) with oil and gas windfalls with oil more than the “cut-off price” of $44.2 in 2022. But due to the sanctions imposed on Russia because of the special operation in Ukraine, the budget rule for the current year was canceled. The restriction on spending from the NWF (no more than 1% of GDP per year) has also been suspended.

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