It appears, the reforms jointly developed and implemented by regulators in the major countries after the global financial crisis truly bolstered the financial system. The very structure of the global financial markets has undergone dramatic changes over the past decade. The role of global banks and cross-border lending by banks has taken a downward turn. Moreover, capital raising markets (stock markets) saw stagnation and even company delisting. The role of market lending (bond markets) and asset managers, i.e. the markets impacted by regulatory reforms to a lesser extent, has increased. These markets could potentially become more volatile, however. In broad terms, what does all this mean for global growth? In our view, it will not be stable. Average growth rates will be lower than in the early 2000s. The main trend we will see in the coming years will be slow economic recovery and the leading central banks taking a tighter policy stance. This will include increased interest rates and curtailed balances. For financial markets, these dynamics bring about two contradictory trends. On the one hand, economic growth has a positive impact on financial markets and risk appetite. On the other hand, increased interest rates are cooling the markets. Therefore, despite the overall stabilisation, there is a high probability of financial market volatility. What does all this mean for the Russian economy? Our economy will be bolstered by external demand to a lesser extent and will be sensitive to external volatility.
I would now like to address the objectives that we are yet to complete. The most pressing problem is lending to business owners. The standard N25 restricting financing of one’s own projects was introduced this year but is still only applied in a preferential mode. Lending to owners is dangerous for two reasons. First, the bank will turn a blind eye to risks linked to its own company when issuing it a loan i.e. the risk of non-return. Second, our practice has shown that if the owner’s project really experiences difficulties the last place it returns money is the affiliated bank. These are not marketable loans but loans extended by unwritten rules. Banks cannot refinance or resell them. In the end, this is the cause of bankruptcy for many banks. It is one of the factors that led to the collapse of relatively large banks, whose licenses we revoked. We want the banking community to know that our intentions in this field are serious and we will continue to take a tighter stance. Therefore, I advise those whose business model is built on lending to owners to seriously consider finding alternatives. Yet another problem is the quality of banks’ capital. We need to be confident that our banks have real, not borrowed, capital. Therefore, as of this year we will be introducing tighter regulation on the quality of capital. When calculating a bank’s capital, we will not take funds from nontransparent sources into account. There is another whole host of problems associated with collateral.