Bank of Russia addressed Accounts Chamber on the results of its work audit
The Central Bank rejoined the Accounts Chamber regarding allegations of failure to finance the market in 2016-2018, Forbes reports. Inspector Aleksey Savatyugin said that the regulator has not fulfilled the tasks that it has set for itself in the “Guidelines for the development of the financial market in 2016-2018.” The auditor accused the Central Bank of the underdevelopment of stock markets, reluctance of enterprises to place securities within the framework of IPO, as well as to take loans from credit organizations.
According to the auditor’s estimates, the consolidation of the market by the Central Bank led to a reduction in the number of entrepreneurs by one and a half to two times. This influenced the decrease in competition, as well as boosted the number of new market entrants.
The Bank of Russia acknowledged that the number of market participants is decreasing, but noted that the reduction was due to the departure of unscrupulous entrepreneurs. The bank also spoke about a sufficient competitive environment, which follows from his research. The competitiveness of enterprises will also be enhanced by the introduction of new technologies for conducting quick transactions and developing marketplaces that the Central Bank is preparing.
Savatyugin also pointed out that the stock market, although it has grown in recent years, didn’t become an important source of raising funds for many enterprises. Russian organizations have almost no IPO, while the market cannot provide sufficient funding. The auditor also drew attention to the fact that many large foreign companies exceeded Russian stock market in terms of capitalization.
The central bank argued this by pressure from geopolitics. In addition, the Bank of Russia claimed that investors are too sensitive to the news. The value of securities reacts even to news that is indirectly related to the issuer. For this reason, many companies are not financially profitable to go public. The central bank expects improvement when the correlation of news and asset values disappears.
Savatyugin’s next comment referred to a decrease in the issuance of loans to non-financial companies. He concluded that banks did not create favorable conditions for enterprises to lend.
The financial market should support the economy, and the scale of this aid depends on the demand from enterprises, representatives of the Bank of Russia say. Also, a decrease in lending is not the best indicator for assessing lending to the economy as a whole. The Central Bank believes that it is better to pay attention to investment in fixed assets, which shows the level of financing of the economy more accurately.
Among other things, Savatyugin found the activities of the Bank of Russia to be strange. He himself sets the tasks, regulates the indicators by which these tasks are carried out and evaluates the quality of the work done.
Representatives of the Bank of Russia answered that they are developing the “Key Directions” together with government, the State Duma Committee and relevant departments. The regulator claims that its activities are efficient and well established.