Interview of Russian Central Bank CEO Elvira Nabiullina

Elvira Nabiullina to RBC: "There is a temptation to think that the sea is knee-deep for us"

The trend of Ezines to have pictures and unrelated text appear every few paragraphs of an interview or article is very annoying for someone doing a copy/paste translate, which then needs to be looked at closely to see if the contextual flow is correct. It should be noted that RBC, which did the interview and posted it to its website, had some sort of issue with its format that prompted RT to due its own editing and translation. Given the recent incident RT caused with its publication of a decontextualized report about remarks Lavrov made in an interview last week, I’m surprised many have used it instead of going to the original and using it as done here. Most are ignorant of Nabiullina’s background that’s very extensive and impressive. IMO, a lot of jealousy and envy exists within all too many men at her success that results in her vilification. That assessment clearly isn’t shared by her boss President Putin who’s known her for over twenty years and had her on his staff for the last decade. Many see she attended the Moscow State University Faculty of Economics, but she graduated from it in 1986 well before it became a Neoliberal bed of negative influence. Yes, she doesn’t look 60 does she. I’ve never read Putin say anything negative about her or her performance. She offered to stepdown amidst an onslaught of vicious personal attacks but Putin refused her resignation and backed her performance, which mostly puta an end to that sort of crap. But it still exists. So, here's an opportunity to learn something about this somewhat unknown quantity in the following interview that follows the original formatting:

In the first interview in almost two years, the head of the Bank of Russia, Elvira Nabiullina, told RBC about the most painful sanctions, the delay in the start of the key rate hike and whether preferential mortgages will become exotic in the future.

Interviewers Yulia Koshkina and Elina Tikhonova

"This is a very negative signal for all central banks"
— The financial sector, in fact, was the first to take the blow of sanctions. The largest banks under blocking sanctions, the freezing of reserves, currency restrictions, disconnection from SWIFT – what was the most unexpected and the most difficult for you?

"We have been living under sanctions since 2014. Therefore, we have always assessed the risk of increased sanctions and worked in all areas, including conducting stress tests with a large number of financial institutions. Therefore, for example, large banks, when they fell under sanctions, were already largely prepared for the fact that this would happen. Disconnection from SWIFT has been a threat since 2014, so we were building a national payment infrastructure. We diversified our reserves and increased the share of yuan and gold. The problem, the problem, was international payments, and they are still a problem, although we are trying to solve it. Of course, the blocking and freezing of the assets of individuals – millions of people who were not subject to sanctions but found themselves with frozen assets – became a very painful topic. This is a difficult problem that we are trying to solve in different ways together with the government.

As for the freezing of reserves, I think this is a very negative signal for all central banks, because it is a violation of the basic principles of reserve protection. But here we were also helped by the floating exchange rate and currency restrictions, which we adopted in the spring of last year. Then, as you remember, they were weakened. And this made it possible to stop the risks of financial stability.

You were right to say that the financial sector was the first to take the brunt of the sanctions – a lot of sanctions, not just the ones you mentioned. But on the whole, we have managed to maintain financial stability.

Do you think that the sanctions pressure will only increase, in particular on the financial sector?

"It is absolutely impossible to predict the policy of sanctions. But we calculate the scenario of increased sanctions pressure, and every year we present [it] in the Main Directions of Monetary Policy. There is certainly a risk. The main thing we can do to counter this risk is to make sure that there is macroeconomic stability and financial stability. That is why, for example, we gave banks a wide range of concessions, and we began to withdraw from them quite vigorously. We believe that banks should again build up their capital buffers in case of possible shocks. Not only sanctions, but there are shocks related to financial conditions and so on, and they must withstand them. Therefore, it is more about understanding this risk and being prepared for it.

Politico magazine called you the "destroyer of the year," in part for Russia's adaptation to sanctions. Do you personally agree with this characterization? In your opinion, can we consider that we have overcome everything? Or may there be new shocks ahead?

- It's hard for me to comment on the first part of the question, it's difficult. I believe that the Central Bank has led, is conducting and will continue to pursue a policy aimed at ensuring that incomes do not depreciate due to high inflation, that there is a stable financial sector, that it allows people and businesses to preserve their savings and provide financial resources for the structural restructuring of the economy. We see that the structural restructuring of the economy is proceeding quite rapidly. And this is primarily due to the market nature of our economy, business, which has adapted very quickly.

Of course, there is a temptation to think that we have gone through 2022 so well and now we are, as they say, knee-deep in the sea. But we must be prepared for increased sanctions pressure. We have been able to respond to the main challenges in the financial sector, but there are also problems in the financial sector that have not been fully resolved, including cross-border payments. Yes, chains are being built, they are constantly changing, but this is still a problem for many enterprises. Although, according to our surveys, the severity of this problem has slightly decreased.

Confidence in the financial market remains a problem due to the blocking of assets, due to the fact that due to sanctions pressure, many issuers have closed information, and so on. For us, the challenge is long-term money in the economy. And these are not only long-term loans, but also the capital market.

The tasks of developing the capital market are very serious. And here it will be necessary to overcome a certain decline in confidence in the financial market due to the sanctions, because of what has happened.

The challenge remains to maintain the same pace of innovation and technology development. Our financial sector is quite advanced – many people now understand this and can compare it with other countries in terms of payment methods, settlements, and so on. And in order to continue developing, of course, we need this impetus for innovation. Moreover, some solutions – not all, but some – used to rely on foreign developments. Now it's being developed in-house. By the way, we see how this affects the shortage of, for example, IT specialists, programmers, and so on in all areas.

Therefore, there will be some effects, and we cannot say that we have answered all the challenges and solved all the problems. But I have a very positive view of the development of the financial sector, of its sustainability, of the fact that it will remain technologically advanced, innovative, and will be able to meet the needs of both people and businesses.

"Looking back, we realize that the policy was soft"
— This year, the Central Bank began to raise the rate in the middle of summer. Looking back, do you think it should have been done earlier or not?

— Inflationary pressures began to rise in the second half of the year. And now, indeed, the rate of price growth is quite high, much higher than our inflation target. And, yes, looking back, we understand that monetary policy was loose, and it was necessary to raise the rate earlier.

"For example, when?"

"For example, in the spring.

— You said that the key rate will remain high until the Bank of Russia sees a sufficiently stable trend towards a slowdown in price growth and a decrease in inflation expectations. What is behind this wording, what are the parameters? Will a two- to three-month slowdown in inflation be enough to make a decision to ease monetary policy?

"We really need to make sure that inflation is steadily decreasing, that these are not one-time factors that can affect the rate of price growth in a particular month. And that's why we analyze a wide range of indicators. Not only the general index of price growth, but above all those indicators that characterize the stability of inflation. This is core inflation, for example, the rate of price growth without taking into account volatile elements. The growth rate of prices for goods and services that are less dependent on the ruble exchange rate. And we will need to make sure that this downward trend in the sustainable components of price growth is sustainable in itself, a steady downward trend in the sustainable components.

It will take two or three months or more, depending on how much the wide range of indicators that characterize sustained inflation is decreasing. And, of course, inflation expectations are very important. Because they are high and have grown, the latest polls have shown. High inflation expectations mean the inertia of inflationary processes. And the higher inflation expectations, the more difficult it is to reduce inflation. Therefore, we will take into account all the indicators.

"Everything seems to have started to slow down, including inflation expectations, and then the eggs intervened.

"That's one of the parameters. When the rate of price growth is high, something is constantly shooting up. I remember 2021 — first one type of goods (prices rose sharply – RBC), then another. And there is a temptation to associate high inflation with some kind of commodity. But, unfortunately, there are common reasons there. First of all, in our case, it is that high demand growth outstrips supply capacity. [This is precisely why Putin is aiming for a Supply-side economy so prices can stabilize and inflation expectations will ease to near zero. But overproduction without an export market means the excess becomes wastage. In other words, such a system must be in fine balance and be regularly tuned, like a Ferrari.]

— High demand, record fiscal stimulus, and low unemployment — all these factors accelerating inflation, how long will they last?

"There are factors that are with us for a long time. This includes the situation in the labour market and low unemployment. I think that this factor will determine the supply capacity, how quickly the supply can adjust to the demand. [Yes, the demographic issue is part of the solution, which takes time to solve.]

As for the fiscal impulse, it is true that we have a stimulating fiscal policy, but it is assumed that the fiscal impulse, for example, in 2024 will be less than in 2023.

Consumer demand is indeed high, but it is directly influenced by our monetary policy and the key rate. Our decisions affect the economy with a certain lag. Because this is a long chain: an increase in the key rate, followed by an increase in market rates on deposits and loans. This affects the volume of deposits, loans, and changes in people's behavior – they will spend, save, and so on. And only after that does it affect prices. We estimate these lags at three to six quarters.

"Still three or six, not lengthening?"

"As before. We are not lengthening these lags, but, of course, some solutions can be implemented faster, or they can be implemented more slowly. It depends on other factors as well. A lot of things affect inflation expectations and exchange rate dynamics. Therefore, in general, we proceed from the assumption that the decisions on the key rate are working, and we see that they are working. They work with lags. We will assess how the effects of the decisions we have already made are implemented in the economy.

In September, you said that high rates in Russia would last for a long time. And it seems that this has only fueled the demand for loans. [Yes, very counterintuitive as higher rates are supposed to deter loans.] Don't you feel that because of such a clear signal, the market in some sense played against the Central Bank?

"No, I don't have that feeling. Of course, there are some effects of this kind, but they would be serious if inflation continued to rise and we raised the key rate very slowly. Then people would understand perfectly well that inflation will not slow down, it will continue to grow and the rate will continue to rise. We tried to act decisively. Let me remind you that we have raised the rate from 7.5% to 16% in six months. And each time, we assess whether monetary policy tightness is sufficient to meet our inflation target of close to 4% by next year.

We can already see this in the demand for market loans – for example, market mortgages are slowing down. Of course, some elements arise, for example, in the case of preferential mortgages: people try to take them out faster, and when interest rates rise, the difference with the fixed rate on preferential mortgages makes this preferential mortgage more attractive. But this is not so much a question of monetary policy as of the scale of preferential programs. [And there are many such programs.]

"If the price of oil is $88-90 per barrel, we can start buying foreign currency"
— Since January, the Central Bank has been returning to mirroring regular operations from the NWF according to the budget rule. Does the Bank of Russia remain a net seller of foreign currency or, possibly, will it be a net buyer?

"Whether we will be a net seller or a net buyer largely depends on the price of oil. If the price of oil remains at the current level, then we will be a net seller of currency. If the price of oil is $88-90 per barrel of Brent, then we can move to the status of a buyer of foreign currency. In January, we will sell currency. In the near future, we will announce what sales will be in January

— Do you think it is necessary to extend the presidential decree on the repatriation of foreign exchange earnings, which expires in April 2024? You have always advocated that such solutions should be temporary.

"I take the position that it should be temporary. We are now really seeing an increase in foreign currency sales by exporters. In November, net sales of foreign currency by exporters may even approach 100% of revenue. But there are several factors at play. First, foreign currency was mainly sold by exporters, including against the backdrop of high oil prices in previous months. We also have lags there, from high oil prices to the arrival of export earnings and their sale. And it was the currency that was being sold from high oil prices. There were one-off factors related to currency conversion for dividend payments. In addition, we see that some exporters, due to the high interest rate on ruble loans – our monetary policy also works here – have begun to take foreign currency loans and then sell foreign currency to pay for their ruble expenses. And, of course, the decree had some influence. But it is probably impossible to isolate the effect of each factor now.

In our opinion, the reason why the decree should be temporary is that over time, companies learn to circumvent the restrictions that are being imposed. In addition, such restrictions complicate international settlements, primarily for imports, the necessary import of equipment, and so on. Therefore, we believe that [it] should be temporary. But it will be a discussion with the government, I think, in the near future.

— Is the sale of foreign currency earnings still a determining factor for the ruble exchange rate now?

"I don't think so. The determining factors, the fundamental factors that affect the exchange rate, are the state of the balance of payments, our exports, and the ruble demand for imports. Ruble demand for imports was fueled, among other things, by the availability and rapid growth of ruble loans. Monetary policy is now having an impact on stabilising the exchange rate, obviously.

— That is, when the decree expires in March, we will not see any sharp change in the situation in the foreign exchange market?

"We don't expect that, no.

— You mentioned the difficulties for companies [because of the decree]. There is such a thing as the "circulation of rubles" – this is the need for exporters who receive ruble earnings under a contract to convert it into foreign currency, return it and convert it again. Do you see the danger of such double conversion, does it create any risks?

— There is a certain problem associated with the fact that many of our companies have switched to receiving export earnings in rubles. And this is positive. And when they are now forced to convert this ruble part of the proceeds into foreign currency in order to sell it later, this increases the turnover of the foreign exchange market, but this simply means additional costs of commissions for the conversion of this currency for companies. Fundamentally, this does not affect the exchange rate.

"It's more of an impact on business.

— Yes, for business. For some additional costs.

- Is the decree expected to be adjusted in this regard?

"Rather, it is the competence of the government.

"Banks will remain profitable"
— This year, a record net profit of the banking sector is expected. This was also influenced by the one-time factor of currency revaluation. Are there any fundamental reasons for this success this year, or were the banks lucky, and next year could be much worse?

— The main reasons for the profit growth are fundamental, although there were also one-off reasons, for example, exchange rate revaluation. In 11 months, banks earned a profit of 3.2 trillion rubles, and about 500 billion rubles of this is currency revaluation in the black. Let me remind you that last year they lost 1 trillion rubles from currency revaluation, but the main factors are, of course.

And the most fundamental factor – and this was a surprise to many – is how quickly the economy has adapted to the sanctions, how fast it is growing. Of course, this means more business for banks. Look at the figures for yourself: corporate lending, if we take the beginning of December, grew by 21% in annual terms, mortgages by 35%, consumer lending by 16%, and commission income of banks increased by 38%. In other words, it is the development of the economy, the development of business.

But when we estimate the earnings of the banking system, it is very important to look at the total profit for two years. Last year, banks' profits were 200 billion rubles, but they fell almost tenfold. In the economy as a whole, it has decreased by about 10%. Why did this happen? Because the banks were quite conservative – and rightly so – in creating reserves. We created reserves, expecting that some of the loans would cease to be serviced, that most of the companies could get into a difficult situation. But as the economy grows, loans are serviced, and banks assess borrowers as sufficiently solvent, they dissolved these reserves this year. [Risk management.]

If we take it over two years, the average profit will probably be 1.7–1.8 trillion rubles, which is about a quarter less than the calm year of 2021.

But the profit will naturally remain positive next year, even without taking into account one-off factors. And this will allow banks to increase capital. They have practically no other sources, external sources are closed, and profit is the main source of capital. And capital is needed in order to lend to the economy, without capital it is impossible to increase loans. Therefore, banks will remain profitable and will continue to lend to the economy.

"Even at today's rates?"

"Even at today's rates. We see that the current rates lead to a slight slowdown in lending. I have already spoken about market mortgages and unsecured consumer lending. The first signs appeared in corporate lending. But due to high inflation expectations, people and businesses take out loans because they believe that inflation will be high. Therefore, inflation expectations are very important to us, and we are monitoring this. But we expect that next year, of course, the growth rate of loans will not be as record high as this year, but it will be positive. In the economy as a whole, it is about 5-10%.

— Large banks are planning a slowdown in both unsecured lending and mortgages for 2024. How will this affect their profits in 2024? Will the average level you mentioned – 1.7–1.8 trillion rubles – be exceeded or not?

— We expect that the banking sector's profit next year will be slightly more than 2 trillion rubles. Due to high rates, their margin may shrink slightly, especially since high rates are more quickly transferred to the side of deposits than to the side of borrowers and lenders. But still, economic activity is developing, positive growth rates are being observed, and they (banks – RBC) will have the opportunity to make a profit.

"Preferential mortgages will not be exotic"
— Tightening the terms of preferential mortgages is a done deal. Could it become exotic next year? Or maybe all mortgages have such a level of interest rates?

— No, of course, mortgages will develop. According to our estimates, it will not be 35% [growth], as this year, but 7–12%. And, we believe, a positive element from a decrease in the growth rate of loans will be that there will be less pressure on the growth of apartment prices. Because apartment prices have also increased significantly.

Preferential mortgages will not be exotic. We proceed from the assumption that the mass programme of preferential mortgages, unaddressed, will expire in July, but targeted mortgages, including family mortgages, will remain. This is a sought-after mortgage. And the volume of family mortgages is now approximately the same as the mass preferential mortgage. Therefore, preferential mortgages will remain and, of course, will not be as exotic as they were before 2020. In addition, market mortgages will develop. Yes, the pace has slowed down, but the mortgage market is developing.

"The government has already agreed to increase the down payment and reduce the loan amount for the metropolitan regions on preferential mortgages. Is the idea of differentiating mortgage rates depending on the region, which was proposed not so long ago, still being discussed? If so, how much can rates increase in Moscow and St. Petersburg?

— Yes, regional mortgages are being discussed. A special working group has been set up in the State Duma, and we are participating in it. Most likely, the family mortgage will remain, now it will be discussed - both its extension and possible parameters. A family mortgage is a targeted mortgage.

We do have a problem that the housing market is stagnant in a number of regions. We see that housing construction and the availability of mortgages are concentrated in large cities. Of course, this is why we need to have tools that allow people, regardless of where they live, to solve housing problems. We will discuss how to do this.

And, of course, it will still be necessary to leave room for market mortgages. After all, people who do not fall into any preferential category should be able to solve their housing problems with the help of market instruments.

— Could you list any regions as potential candidates for preferential regional mortgages? What level of stakes can be acceptable for them?

— It is premature to talk about this, as well as about the level of rates. And, probably, it is not even very correct that we take a region as a region. Because the situation is often acceptable in the capital centres of the regions, but in medium-sized and small towns, there are big problems.

In my opinion, it is necessary to consider the topic more precisely, but all this requires discussion. The administration of these programs and the criteria is a very complex issue. A working group is working, and I think it will discuss all these possibilities. But, once again, the basic mortgage will most likely remain, the family mortgage, the regional mortgage requires additional discussion.

— The Bank of Russia drew attention to the current imbalance in the mortgage market: prices for new buildings are higher than for secondary buildings. In the fall, this gap exceeded 40%.

— Yes, 42

— After the change in the terms of preferential programs next year, what are your expectations? Will it shrink, how noticeably, and how quickly?

"In my opinion, this gap should be narrowed. Because this gap carries risks for people, for banks. Before we introduced mass preferential programs, it was about 10%.

In the next few years, we should return to a more normal gap in the price of housing in the primary and secondary markets. How quickly this will happen will depend, among other things, on the prevalence of preferential programs – whether they will apply only to primary housing or to secondary housing as well. In my opinion, preferential programs should solve not so much the problems of the workload of builders, but the problems of people and the affordability of housing. If people improve their living conditions, it doesn't matter where they get housing, in the primary market or in the secondary market. But this is also a subject for discussion with the government – the government is responsible for preferential programs. But the gap, in my opinion, should at least stop growing, because it was growing last year as well, and it should begin to slowly decline. But now it is probably premature to talk about the pace at which it will decline.

"Are there any unripe problems? Yes, I guess there is."
— For the first time in many years, the Bank of Russia did not revoke a single banking license during the year. This is very unusual for those who follow the financial market. How did it happen? Our banks are stable or...

- Sustainable.

Or maybe not all the problems have matured after the shock of last year? How do you look at it?

"The sanctions crisis of last year and this year was a test of the effectiveness of the recovery policy that we were pursuing. And I can say with full confidence that the banks are really stable: they have coped with such a volume of problems and have gone through this period with dignity.

Are there any unripe problems? Yes, there probably are, but they are not large-scale. One of the unresolved problems is the blocked assets of banks. And we have given them a relaxation so that they can build up reserves for ten years. We are gradually coming out of many other regulatory relaxations. Let's go back to normal throttling and creating additional buffers.

— So we can also go through 2024 without reviews?

"Let's hope so."

— Unexpectedly for the market, the head of the NSPK, Vladimir Komlev, recently announced that he was leaving his post on January 1 after ten years of work. Can these reshuffles indicate that the Central Bank intends to change the vector of development of the NSPK?

— No, the vector of development will remain the same. This is the creation of a national payment and settlement infrastructure. In the past, this was the task of the NSPK and will remain the task of the NSPK. It is the development of this infrastructure, which can be used by all participants in the financial market, that promotes competition. Both we and the NSPK are committed to continuing in the same vein, as they say.

Of course, I would like to thank Mr Komlev, who has done a lot to ensure that the country has its own payment instrument – the Mir card and the Fast Payment System. Because I remember very well, when we started these projects in 2014, there was a lot of skepticism: "Why do we need this? We've got Visa, we've got Mastercard, we've got other payment systems." But we see that it turned out to be in demand. And these services, including the Fast Payment System, allow different banks to compete in the payment market.

"There are risks of investing in foreign securities even through friendly countries"
— SPB Exchange was included in the SDN list. The regulator was again reproached for allowing private investors to buy foreign securities, although unqualified investors could no longer do so. Where is the thin line between protecting the interests of individual investors and a wide range of instruments in the market?

"It's a really difficult question to find that balance. Provide an opportunity to diversify investments, but protect against risks that people may not understand. We prioritize the protection of unqualified investors. Indeed, our citizens had the opportunity to invest in foreign securities so that they could diversify their portfolios. And if they couldn't do it through Russian infrastructure, many would do it directly through Western infrastructure.

After the sanctions were imposed, we warned about these [infrastructure] risks and restricted the ability of unqualified investors to buy foreign securities.

By February last year, our investors had almost $7 billion worth of foreign securities in their hands, up from a little more than $3 billion in November of this year. And now 80% of holders of foreign securities are already qualified investors.

And, of course, there are risks of investing in foreign securities even through the infrastructure of friendly countries. We warned about them and obliged brokers to inform clients about such risks. It's one thing to work in a Russian jurisdiction, but it's another thing to take on the risks of a foreign jurisdiction. We see that our fears were not in vain, because many investors who owned foreign securities through the infrastructure of friendly countries faced problems. Now, due to the risk of secondary sanctions, these organizations are conducting lengthy compliance procedures.

— How does the regulator see the fate and prospects of SPB Exchange?

"We have many financial institutions already under sanctions, quite large ones. And you can see for yourself that almost all of them have adapted, adapted, changed their business models, are evolving. And I am sure that the St. Petersburg Stock Exchange will not be an exception here. She is already thinking about new services, about new products. It has both high-tech infrastructure and professional competencies. So I don't have any concerns here.

You mentioned that the Bank of Russia is paying attention to the scenario of tightening sanctions. How realistic do you think the imposition of sanctions on the Moscow Exchange is? And which of the scenarios for maintaining currency trading will then be implemented when determining the exchange rate?

"We are considering different scenarios and calculating different options for our actions. And the exchange does it. As for the functioning of the foreign exchange market, we also have an over-the-counter foreign exchange market, which provides foreign exchange trading. By the way, its share is already more than half – 53% of currency trading. As for the exchange rate, last year, understanding all sorts of sanctions risks, we issued an instruction explaining how the exchange rate would be determined. It will be established on the basis of data on over-the-counter trading, including the use of bank statements.

— To what extent can the exchange rate in over-the-counter trading in the absence of exchange trading fly into space?

"No, I don't think we see [such risks]. It depends on the supply and demand [of the currency]. We have a fairly large volume of OTC trading, there are many participants in it. Rather, it is a question of obtaining information about OTC transactions, so we will use different sources. But I don't think that this in itself can seriously affect the rate.

"There is interest, but it is commensurate with fears of sanctions"
— How do you assess the prospects for the exchange of blocked assets between private investors? Are you already aware of cases when non-residents have requested national regulators for permits for such transactions?

"We have created legal conditions for such an exchange to take place. In our opinion, this can be mutually beneficial for investors. But then everything depends on the investors themselves, primarily non-residents. I don't have any information yet as to whether or not they requested [permission].

- If everything works out and this stage of the exchange takes place, will there be further stages? And will there be an increase in the maximum amount that can be exchanged?

- Let's see if this stage takes place, and then we will talk. Because this stage is very important. It is aimed at solving the problems of the most massive investor, who has a very small amount of investment.

"The Central Bank and not only said that there is a plan to build new chains with friendly depositories for access to foreign markets, but it is clear that only friendly ones. At what stage are these plans now? And what kind of depositories can they be?

— Indeed, this is an important problem – building depository bridges. We see that there is a need for this among market participants. For our part, we are consulting with regulators in friendly countries to ensure that such projects are implemented. By the way, we recently adopted a decision of the Board of Directors in September and removed some regulatory barriers to building such bridges. If necessary, we are ready to adjust our regulation. We see that market participants, for their part, are also establishing cooperation. But so far, there is no need to talk about final decisions. Rather, at the level of discussions and approaches.


— Can you define what kind of friendly depositories they are? Is it near friendly or far friendly?

"Everyone is friendly.

"Do you feel a reciprocal interest from the other side?"

"There is a reciprocal interest, but it is commensurate with the fears of secondary sanctions.

"There is always room for unfair practices"
— The President recently proposed to extend the insurance of funds to investment accounts within the limit of 1.4 million rubles, but not market risks, but the risks of bankruptcy of the broker. Do you have any concerns that unfair practices may arise when market participants tell clients that everything is insured, "invest boldly"?

— Yes, there are such concerns. Because there is always room for unfair practices. And we have already seen this from our own experience. Especially when investment products are sold under the guise of insurance, capital guarantees. This was already the case without the introduction of this element of insurance. But we will fight it hard. Both to explain and to suppress these practices.

— In general, how relevant are new instruments for attracting long-term money, long-term investment instruments, IIAs of the third type, long-term savings programs for investors now and how much will they be in demand at the first stage?

"We believe that they will be in demand. We see this in the experience of IIS-1 and IIS-2 – although a large motive for IIS-1 was related to obtaining tax benefits. But we believe that there will be some interest here as well. It will be necessary to talk more about these tools. But we see people's interest in diversifying investments and even lengthening these investments. Moreover, a number of benefits are provided. [My Emphasis]

I find nothing but good news for Russian’s economy from this report. Elvira has managed the overall risk very impressively in a way that’s allowed for continual growth, although GDP figures sometimes belie what’s actually happening. The bank is clearly working on the creation of additional clearing mechanisms to deal with international trade. The banking sector’s recovery was critical as Russia now has the working capital needed to expand its national projects while also conducting the SMO. And recall that Russia’s doing planning for the period to 2035 which entails the need for the financial basis to remain very firm along with continued well thought risk management. I predict she’ll remain at the helm of Russia’s Central Bank until she wants to retire.

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