The Bank of Russia sees a risk of escalating sanctions

The Bank of Russia sees a risk of escalating sanctions


The sanctions currently in force against Russia, most likely, will not be cancelled. In this case there is also the risk of escalating sanctions, which could adversely affect the implementation of planned measures.

MOSCOW, 2 Dec. Russian financial market is subject to geopolitical and external shocks, there is a risk of escalating sanctions, referred to in “the Main directions of development and ensure the stability of the financial market of the Russian Federation for the period 2016-2018”, developed by the CBR.

As noted in the document, due to the fact that the Russian financial market is subject to geopolitical and external shocks, long-term forecasting and planning are problematic. The last shocks were associated, in particular, with negative changes in the dynamics of commodity prices (including oil) and sanctions by foreign jurisdictions, reminiscent of the Central Bank.

“In the preparation of this document was adopted the hypothesis that the sanctions currently in force against Russia for geopolitical reasons, will not be lifted, and oil prices will fluctuate close to existing values. At the same time, there is a risk of escalating sanctions that could adversely affect the ability of the proposed activities or to make adjustments to the current priorities of the state and, accordingly, the allocation of its resources”, — the document says.

The authors of the document warn that in the event of an escalation of sanctions measures will partially lose its relevance and will require revision. “At the same time there is a risk of prolongation of the moratorium on transfer of pension savings in private pension funds in 2017 and subsequent years that will have a negative impact on public confidence in the defined contribution component of the pension system and, consequently, will help reduce growth of long-term investments”, — also indicates the Central Bank.

The regulator notes that the financial sector of the Russian Federation currently has a high speed of the reforms and the fall in the profitability of investments in it, there is a risk that the industry may not be able to adapt and to bring their activities into line with a large number of the planned introduction of the requirements.

“This will entail a substantial reduction in the sector of financial intermediation or will require the rejection of reforms or postponing their implementation for a later date. In the latter case, will fail to reach the required for full functioning of the financial market the level of competition and confidence,” believe in the Central Bank.