The Bank of Russia put off the timelines of the increase of the effective rates of contributions to the CRF

On January 19, 2009, the CBR's Board of Directors has ruled to put off the timelines of the stage-by-stage increase of the effective rates of contributions to the Compulsory Reserves Fund (CRF).

As a reminder, the Bank of Russia lowered them effective as of October 15, 200: at the time, by all kinds of reserved liabilities the rates were set at the level of 0.5%. At the same time, the decision was made that the rates were to be lowered for a certain period: they should be raised up to 1.5% since February 1, 2009, and further up to 2.5% since March 1, 2009.
According to the new decision, the respective timelines were changed from February 1 and March 1, 2009 for May 1 and June 1, 2009, respectively. In all likelihood the CBR made this decision due to a complex situation in the national financial sector engendered by the global financial crisis. In the nearest future, the Russian credit institutions will face a rapid rise in the number of customers' failures to pay back loans, which should affect the banks' financial standing. At this juncture, should banks be deprived of liquidity in the form of deductions to the CRF, it would just propagate the financial instability.

P. Trounin, Head, Department of Monetary and Credit Policy