Translated material
Supervisory vacuum
Five years ago, the Central Bank, with the active support of many small and medium-sized bankers, prevented the government from carrying out reform. The plan for this reform on behalf of the Russian Union of Industrialists and Entrepreneurs was proposed by major bankers. They believed that the authorities should use administrative measures to stimulate the consolidation of banks, and remove small “money changers” that live off “gray” transactions from the market. At that time, the authorities had the political resource for such a reform, but there was no desire to waste this resource. Nevertheless, over the past years, the banking system has experienced truly serious structural changes compared to other industries: a deposit insurance system was created and started operating, and the supervisory unit of the Central Bank under the leadership of Andrei Kozlov did its best to prevent dubious banks from entering there. But, apparently, he exaggerated slightly when in 2002, in an interview, when asked about the need for strong political support, he said: “We feel it. There is support."
I don’t know whether it was intentional or not, Vladislav Reznik points out that the current supervisory practice has created a “killer effect.” He, however, does not mean the death of Andrei Kozlov, but the massive revocation of licenses (60 in 2006). Nevertheless, it was the shooting of Kozlov and the subsequent investigation that somehow immediately destroyed the myth of strong, impartial and “advanced” banking supervision from a methodological point of view. “The Bank of Russia has created a special world, which is characterized by the usurpation of state powers to counter legalization; its own system of rules, within the framework of which banks punish for legal transactions, formally covering it up with references to the law on legalization,” Mr. Reznik pronounces his verdict. In place of the formidable department, a vacuum instantly arose, which interested parties were not slow to fill. Not a week goes by without banking associations providing urgent advice to the Central Bank on how regulatory documents in the field of supervision need to be improved. Recently, the style of presentation of these initiatives has become increasingly similar to dictatorship.
The situation clearly requires some kind of resolution, regardless of the search and punishment of the killers of Andrei Kozlov .
There are no unambiguous recipes in the world for who exactly should carry out banking supervision. In the United States, as you know, monetary policy is handled by the Federal Reserve, and banking supervision is carried out by the Office of the Comptroller of the Currency, which is part of the Treasury system. In the UK, Labor, after coming to power in 1997, first of all gave the Bank of England independent status (and Chancellor Gordon Brown still considers this decision the most important during the current administration), and since then the British financial system has operated on principles largely voluntary implementation of recommendations of an independent agency - the Financial Services Authority.
Obviously, the main principle is the absence of conflicts of interest. The regulator cannot simultaneously set the rules of the game and be the largest market player. The Russian Central Bank combines the functions of control over monetary circulation and banking supervision. Having a legalized independent status, in the mid-1990s, under pressure from the IMF, he was able to put it into practice by refusing the government to finance the budget deficit. However, as you know, the Central Bank not only sets the rules of the game in the banking sector and controls their implementation, but is also a shareholder of the largest commercial Russian bank. And, in general, for the full functioning of the Central Bank’s supervision, the only thing missing is a power function - that’s why Andrei Kozlov had to resort to the services of riot police in the story with Sodbiznesbank .
Discussions about the status of the Central Bank traditionally arose only simultaneously with personnel issues. It was necessary to get rid of Viktor Gerashchenko - and the National Banking Council was built over the Central Bank. By the way, at the same time, among other things, the Kremlin discussed the idea of a branch of supervision, but it was clearly not the main thing on the agenda (which only confirms the fact that the authorities acted “according to the situation”). The question of transferring supervision to a “mega-regulator”, which arose with the arrival of Oleg Vyugin to the FFMS, already looked like a pure theory. Now Andrei Kozlov, a man with a strong character and great authority, has passed away, and again the question arises that the entire system needs to be rebuilt.
History teaches us to always look for “who benefits.” The first thing that comes to mind is that any reorganization leads to administrative confusion, in our case, to a temporary weakening of supervision. There is no need to explain who benefits from this.
History also teaches that a crisis is the best time for reforms. In this sense, Mr. Reznik’s initiative came quite timely. Can it be implemented quickly and without loss for the quality of management? “Of course, it would be logical to give supervision to the FFMS, but this is an ideal situation, and striving for ideal is not our method. Well, what does Rosfinmonitoring need to establish banking supervision? He doesn’t even need to take personnel from the Central Bank, just call a hundred tax officers from St. Petersburg and conduct training according to instructions “from Frenkel,” and here is a ready-made service for you,” jokes a banker friend.
However, is he joking? After all, striving for ideal is not our method...