ALEXEI VEDEV: DUE TO A LACK OF THE FINANCIAL SECTOR DEVELOPMENT STRATEGY THERE IS A LACK OF COORDINATION OF ACTIVITIES BETWEEN THE GOVERNMENT AND THE CENTRAL BANK
Alexei Vedev, Head of the Financial Studies Department, the Gaidar Institute commented to the IZ.ru on the situation in the banking sector caused by a lack of coordination between the government and the Central Bank.
Having analyzed the Main Guidelines for Development of the Financial Market, a strategic document of the RF Central Bank, the Accounts Chamber has come to a conclusion that the differences between the Central Bank and the Government create risks for the banking sector. The problem consists in the fact that the interests of the RF Central Bank and the sector which is under its jurisdiction do not always coincide, while the policy of the Government is formed independently fr om the RF Central Bank’s vision.
“Due to a lack of the financial sector development strategy, there is a lack of coordination of activities between the Government and the Central Bank, which situation results in a decrease in the number of credit institutions”, Alexei Vedev notes. In his view, in the present situation market participants do not quite understand on which configuration the banking sector is based.
“One should also take into account the dualism of the banking sector wh ere, on one side, the sector of the economy creates the added value, while, on the other hand, banks’ profits leads to losses of other agents. For example, record-high profits of two state-run banks and their monopoly position result in the costs for the entire economy”, the expert concludes.
“Due to a lack of the financial sector development strategy, there is a lack of coordination of activities between the Government and the Central Bank, which situation results in a decrease in the number of credit institutions”, Alexei Vedev notes. In his view, in the present situation market participants do not quite understand on which configuration the banking sector is based.
“One should also take into account the dualism of the banking sector wh ere, on one side, the sector of the economy creates the added value, while, on the other hand, banks’ profits leads to losses of other agents. For example, record-high profits of two state-run banks and their monopoly position result in the costs for the entire economy”, the expert concludes.