What the IMF does not argue about with the Central Bank - about the "hole" in the balance sheet
Percentage is not a tool, but a means
With this restless May, only specialists paid close enough attention to two events that are directly related to the activities of the country's main credit institution - the Central Bank of the Russian Federation.
The first of them is an absolutely unexpected and, as it seems to us, hardly necessary pick with the International Monetary Fund. For what reason? According to the very traditional - about the key rate, which it was recently decided to raise - first to 4,5, and then to 5 percent per annum (This old, old, new bet).
And this is despite the clearly indicated in all strategic materials not only of the Central Bank, but much higher, the course of suppressing inflation. Until recently, it should have been brought down to at least 4%, but now it is simply pointless to talk about such a benchmark.
If even for a select few - "favorite" banks of the Central Bank, money is a percentage more expensive, then what can we say about the financial system and the economy of the country as a whole. And, as a consequence, about consumer prices and the welfare of citizens who received no more than a minimum from the treasury during the pandemic.
Who is the turtle here?
Yes, the advice from the IMF on the reduction of the key rate was a little late - as the pandemic emerged in Russia, the situation worsened not only with the rise in prices, but also with the money circulation in general. And this is against the background of mass impoverishment of citizens, many of whom were left not only without work, but also without any benefits.
But the slowness of the IMF does not negate the need to return to soft monetary policy as soon as possible. Otherwise, put an end to all hopes for economic revival.
The current financial problems, in which our Central Bank itself played an important role, do not give reason to simply dismiss the IMF as if it were an annoying fly. In the end, if the country is so bad with cheap loans, then the IMF has always been in complete order with this.
And they will not pay attention to any sanctions there. Meanwhile, suffering considerable losses in assets, the Central Bank for some reason suddenly gives a sharp rebuff to the International Monetary Fund for the fact that it "has been working out recommendations for too long."
According to the first deputy chairman of the Central Bank Sergei Shvetsov, it may be fair, “they no longer meet the requirements of the economic situation". But we are getting bad with finances right now - the Central Bank, having raised the rate, has just signed it.
Compare the IMF with "it takes a long time for a turtle to work out its recommendation"- this is spectacular, but our gentlemen, the state bankers themselves, are not much better. It is believed that they were late with a high rate, but in fact, they were rather in a hurry.
But they said very confidently that everything “did the right thing - raised the rate this year, ensuring price stability". Let them at least now explain how the rise in the cost of credit itself has a positive effect on price stability. Or are they hiding something from us?
Who's got a hole in his pocket?
Well, for example, unauthorized ruble emission or spending of gold and foreign exchange reserves. This is the second event in May associated with our most central bank. The press leaked data on a record "hole" in the currency balance of the Central Bank of the Russian Federation.
The situation is painfully reminiscent of the US mortgage crisis in 2007-2008. and the subsequent collapse of the Fannie Mae and Freddie Mac funds. Tu history it is necessary to briefly recall, since the details for more than ten years have clearly blurred.
In the United States, towards the end of 2007, there was a huge gap between mortgage loans and the real solvency of citizens. The real estate market in a matter of days already in 2008 fell from $ 10 trillion to $ 4 trillion with a loss of six trillion at once.
Then it was almost half of the US national debt. In a series of bankruptcies, the companies and those same funds - accumulators of funds - have become poorer by a total of $ 350 billion. Russia is now clearly on the verge of this, although the amount is, of course, smaller at stake.
But raising rates in a similar situation is just shamelessly robbing gullible citizens. The Americans were actually saved by the global crisis, comparable in amounts to the Great Depression, and it is not clear how we can save ourselves.
Probably referring to the untimely advice of the IMF. It is also good that in the Russian case we are talking about a "hole" of only $ 15 billion. This is how outside experts assess the immediate risks for the domestic economy.
Currency assets - its monetary connection with the world economy, without which we are nowhere, nothing can be done. But these assets include currency, special drawing rights and a reserve position in the IMF, in fact, at the full disposal of the completely independent Central Bank of the Russian Federation.
Not everything is for sale
Although, according to the law, all this is the main part of the international reserves of the Russian Federation. The discrepancy in the figures according to the Central Bank reports indicates, most likely, that our reserves in foreign currency bring income significantly lower than the level of internal inflation, that is, they are gradually burning out.
How long it was possible to warn about this, we, sorry, do not know (Our most central central bank in the world). We will be told from the Central Bank again and again that the reserves are stored in highly reliable and highly liquid assets. Yes, but at the same time low-profit, alas.
So why, then, to the last resist with the printout of the same National Security Fund? Having invested at least part of its funds in the development of infrastructure, in promising industries, and finally, simply in people, we may get even less return than with those very "assets".
But we will help very many to survive, and the economy, most likely, will be warmed up so that it will return everything in full. Not only the export of oil and gas and continue to live. Moreover, a cold foreign policy a priori does not imply a guarantee of preserving "the success of financial activities and trade».
It was a micro quote from the materials of the Central Bank of the Russian Federation itself. Back in February, the IMF almost imposed a rate cut from 4,25 percent to 3,75 percent from the IMF. It is somehow hard to believe that since then everything has changed so much not for the better.
Or has the financial crisis already happened? And we weren't even allowed to notice? It was then that the head of the Central Bank Elvira Nabiullina reminded that the IMF in its recommendations proceeds from other inflation expectations than the Russian regulator.
Where did the inflation expectations come from in February, quite recently - from under the printing press or from the data on state reserves? Most likely, both took place. It is necessary to print money, since it is necessary to fulfill the promised citizens, and the reserves, more precisely, the part that can be used, is becoming less and less.
Instead of PS
No, the Bank of Russia today has not gone into the shadows under the threat of being checked by the Accounts Chamber, which, from this department, its head Alexei Kudrin speaks of as a real prospect. But for some reason no one believes.
The independence, one might say, the independence of the Central Bank has repeatedly allowed its critics to compare the institution with a sort of sacred cow, and the Board of Directors, of course, with bad shepherds.
Your authors - we admit, just from among such critics on duty, although they never stooped to this - you know, read (Our central bank. Who does he serve?). In addition, they have always paid tribute to the leadership of the Central Bank of the Russian Federation for their ability to distance themselves from foreign colleagues, who, by the way, regularly recognized its representatives as "the best in the industry."
However, the ostentatious Fronde sometimes exceeds the boundaries, no, not reasonable, but permissible, although what the hell is not joking, and will we be carried over again? Oil and gas will not run out soon, and the launch of Nord Stream 2 is not far off. But why take away reserves from their own children?
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