The Bank of Russia identified four reasons why in Russia there was no extensive dollarization of deposits, it follows from the analytical report of the Department of studies and forecasting of the Central Bank “the Dynamics of dollarization of deposits in the weakening of the national currency in Russia and Kazakhstan”, published on the website of the Bank of Russia.
Since the beginning of 2014 the share of foreign currency deposits in Russia increased from 20% to 35%, while in Kazakhstan, with less weakening of the national currency, the share of dollar deposits increased from 37% to 65%. During the same period (since the beginning of 2014 by the end of the third quarter of 2015) the dollar rose against the ruble on 102,8%, and in relation to the Tang — by 75.5%.
The Central Bank said that in Russia the main factor of growth in the share of deposits in foreign currency was the effect of the revaluation and not changing savings preferences of citizens, as it was in Kazakhstan. Second, the dollarization of deposits have hampered the free exchange rate. “Exchange rate volatility increases the risks associated with the conversion of foreign currency assets and, accordingly, reduces the liquidity of foreign currency deposits”, — emphasized in the Central Bank. In addition, the fixed exchange rate regime often creates asymmetric expectations: economic agents believe in the willingness and ability of the Central Bank to curb the strengthening of the national currency, but not its weakening, indicated in the review. In Kazakhstan, on the contrary the rate has been fixed that could cause much more strong dollarization.
Impacted by the increase in the Bank of Russia key rate to 17% in December 2014 that made ruble deposits attractive and stopped the outflow of deposits. “The Bank of Russia was actively influenced through key rate interest rates in the economy and the attractiveness of ruble assets”, — stated in the review of the Central Bank. In Kazakhstan, rates remained stable due to the fact that the national Bank of Kazakhstan to conduct active interest rate policy under a regime of managed exchange rate.
Also, the Bank of Russia assumes that a sharp rise in interest rates on ruble deposits in Russia, could reflect the willingness of commercial banks to keep the currency structure of their balance sheets, to prevent a sharp growth of foreign currency liabilities and the inconsistency between the currency structure of assets and liabilities.