The CBR Has Extended Its Collateral List

On February 9, the CBR’s Board of Directors ruled to extend the collateral list, i.e. the list of securities which commercial banks can use as collateral to attract funds from the bank of Russia.

The list was extended to include stock and obligations issued by the so-called “backbone” organizations the list of which has been approved by the government commission on increase of sustainability of the national economy’s development. Meanwhile, these papers have to be included in a quotation list of at least one stock exchange that operates in Russia’s territory.

This move pursues the aim of boosting demand for such issuers’ papers and, consequently, extending their opportunities for attraction of financing. At the same time, it should be understood that while granting funds to banks against such papers, the CBR undertakes risks associated with a possible deterioration of the “backbone” corporations’ standing. Plus, the extension of the collateral list should improve the standing of credit institutions that hold on their balance sheet previously not included in the collateral list papers of the “backbone” corporations, for the banks are now eligible for financing against such papers.

We trust the extension of the collateral list should help somewhat improve the “backbone” corporations’ standing; however, we believe that an anti-crisis policy should focus not only on pillaring largest corporations, some of which may prove to be uncompetitive on the world market, but on cushioning effects of the crisis for all economic agents as well.

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