FACTBOX-Emergency measures announced by Russia’s central bank

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MOSCOW, Feb 28 (Reuters) – The Russian Central Bank Governor Elvira Nabiullina spoke at an online news conference after the central bank hiked its key rate to 20% in an emergency move on Monday. 

Nabiullina spoke in Russian. The quotes below were translated into English by Reuters.

KEY RATE AND SANCTIONS

The central bank today increased its key rate to 20% as new sanctions triggered a significant deviation of the rouble rate and limited the central bank’s options to use its gold and foreign exchange reserves…

We had to increase rates which would compensate citizens for increased inflationary risks.

We will take further monetary policy decisions based on actual changes in the situation and our assessment of risks, first of all based on external conditions. Monetary policy will be aimed at maintaining financial and price stability.

INTERVENTIONS

On Thursday and Friday the Bank of Russia was conducting forex interventions – $1 billion (on Thursday) and a smaller amount on Friday. Given restrictions on gold and forex reserves usage in dollars and euros, we did not conduct interventions today.

MANDATORY ORDER FOR EXPORTERS TO SELL 80% OF THEIR EXPORT REVENUES

This measure was taken to allow for smooth forex offering on the domestic forex market to meet demand from importers and citizens. At the same time, we are implementing a number of steps to curb capital outflows by non-residents.

SWIFT

We have been developing domestic financial infrastructure and it will be working without interruptions. We have the domestic banking messaging system – SPFS – which can replace SWIFT domestically. Foreign participants are able to join it

BANKING SECTOR AND ADDITIONAL TOOLS

The central bank will be flexible to use any tools needed… The banking sector switched to structural liquidity deficit, banks have enough coverage to raise funding from the central bank…

We took a number of measures which would allow banks not to increase their provisions during the year… The measures taken are equivalent to an increase of 900 billion roubles in banking capital…

All banks are fulfilling and will continue to fulfil their obligations towards clients. All customers’ funds are preserved, all operations are available to clients.

Following are measures announced since Sunday by the Bank of Russia.

  • As the rouble fell to record lows on Monday, it hiked its main interest rate to 20%, the highest level this century, from 9.5%, to cushion the impact of its fall and counter inflation that threatens Russians’ savings. 

“External conditions for the Russian economy have drastically changed,” the central bank said.

  • Together with the finance ministry, ordered companies to be ready to sell 80% of their foreign currency revenues.
  • Said it would substantially increase the range of securities it will accept as collateral for loans.
  • Ordered Russian brokers to reject ‘sell’ orders for Russian securities from foreign clients from 0400 GMT on Monday until told otherwise. It did not specify which securities the ban applies to. 
  • Said it would free up 733 billion roubles ($7.31 billion) in local banks’ reserves by releasing a capital buffer built up against unsecured consumer loans and mortgages.
  • On Sunday, the central bank said it would resume buying gold on the domestic market from Feb. 28.
  • To help banks with their liquidity, announced a repurchase auction with no limits, to be held on Monday. It sold 3.04 trillion roubles ($28.3 billion) at the “fine-tuning” repo auction.
  • Allowed banks suffering from “external circumstances” to keep open foreign currency positions above the official limits until July 1.

The central bank said it will continue to monitor changes in currency positions “in order to guarantee the normal functioning of the currency and money markets and the financial stability of lending institutions”. 

The central bank has said Russia’s banking system remains stable, with bank cards working as normal and customers able to access their funds.

Finance Minister Anton Siluanov said on Monday the government was ready to strengthen commercial banks’ capital base if required.

Photo – Head of the Russian Central Bank Elvira Nabiulina. EPA-EFE/MAXIM SHIPENKOV

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