One of the versions of the reform of control and supervisory activities assumed the division of some functions of the Bank of Russia. In this formulation, the topic did not receive serious support for obvious reasons. There is no practical organizational alternative to the Central Bank, and artificial structures are hardly appropriate. Independence is a mandatory condition for effective monetary policy, supervision and regulation of financial institutions all over the world, not only in our country. The experience of the Federal Service for Financial Markets shows the weakness of an independent regulatory and control body created with budget money.

In addition to the functions of the emission center and mega-regulator, the Bank of Russia is involved in other diverse areas, where not only independence, but also other qualities are important for efficiency. The management of subsidiaries should be based on market motivation, and profit-making is not the goal of the Central Bank's activities by law. Deposit insurance is based on payments by banks, which have no vote in determining their size. The Bank of Russia influences the structure of the economy through macroprudential policy, and the state and business do not formally participate in its formation.

The effectiveness of its functions in these areas is related not only to its own activities, but also to the nature of its interaction with the external environment. Much can be improved here, and "therapeutic" methods are quite sufficient, it is not necessary to resort to "surgical" ones.

The Market as an Ally of Efficiency

The Bank of Russia as a controlling shareholder occupies a leading position in the banking market, its participation is directly or indirectly noticeable in the payment market, the insurance market, in the activities of non-state pension funds, rating companies, and stock exchanges. In the banking sector, competition between state banks that do not experience serious restrictions on capital results in forms of lending to large private businesses that are quite bizarre for international banking standards, risky consumer lending products, and distortions in the cost of retail products.

Why does the Bank of Russia need banking supervision?

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This state of affairs differs fundamentally from the situation in the OECD member countries, whose standards Russia has never abandoned. In the 36 OECD countries, there were only five state-owned financial institutions in the world top 2000. The dominance of state-owned financial institutions is typical of non-OECD countries China and India, whose example, I hope, is not included in the examples of financial institution development goals.

Privatization of banks is a hot topic of structural reforms that, unfortunately, is not discussed in detail. Due to an objective conflict of interests with supervisory and regulatory functions, the Bank of Russia should become a leader. I would like to note that the status of banks being rehabilitated gives some banks controlled by the Central Bank the opportunity to merge their subsidiary banks with private ones without losing their investments in the authorized capital. It is a pity that the Bank of Russia has not yet expressed any intention to strengthen the existing private players.

As an interim solution before the banks are sold, the role of independent members of the boards of directors can be activated. At present, 48% of the board members of the three largest subsidiary banks of the Central Bank ( Sberbank , Otkritie , Trust) are the heads of the Bank of Russia and officials. For comparison: in Gazprom, Rosneft, Russian Railways only 38% of directors are officials and heads of organizations, in VTB and RSHB - 32%.

The Bank of Russia may more boldly form boards of directors of controlled financial organizations from independent directors who can work on a permanent basis without regard to conflicts of interest and control key parameters for shareholders. Of course, without privatization, this solution is temporary. Establishing KPIs for pre-sale preparation for independent directors would serve as a good incentive to accelerate privatization.

Activating the role of the DIA

The Bank of Russia controls the Deposit Insurance Agency (DIA) based on its role in financing the deposit insurance system. Fast loan repayment is an understandable goal of any creditor. However, the Bank of Russia, which has no profit-making goal and liquidity constraints, may not set such a task. The current rate of payments to the deposit insurance fund (0.15% per quarter) seriously distorts the value of household deposits and slows down the development of banks. The benefits of reducing the rate exceed the unobvious consequences of accelerating the repayment of the loan provided by the DIA for the purpose of financing the deposit insurance system.

There is no platform for determining the level of bank payments that is balanced with the market: there are no independent directors on the DIA board of directors. Allowing market representatives or independent directors to make decisions on the DIA board of directors will not only help normalize financial relationships with contribution payers, but also bring market expertise to such areas of DIA work as the sale of assets of liquidated organizations and the construction of modern systems for paying insurance compensation.

In Russia, where even after the bank supervision reform, the value of bankrupt banks' assets in 2017-2018 decreased by 60% (by 557.1 billion rubles) after the revocation of their licenses, non-standard and prompt measures are required to complete the cleanup as soon as possible. The Bank of Russia can use the DIA as a competitive tool for strengthening the quality of supervision. The Agency can, together with the Central Bank, check not only the correctness of the payment of insurance premiums, but also the quality of the assets of insured financial institutions. This task is the core of the DIA as a bank liquidator aimed at maximizing the satisfaction of creditors' claims. The experience of parallel joint assessment of banks before rehabilitation was effective, it is worth replicating. The Central Bank's assistance in the timely implementation of supervisory actions will save much more funds of bank creditors than subsequent searches for withdrawn assets. This is done in some countries, for example, in the United States, seeing in parallel assessments of assets by supervisory and insurance authorities a reserve for improving quality.

Macroprudential Policy Management

The macroprudential policy of the Central Bank influences the business of banks by reducing the supply of individual products for the purposes of financial stability. However, the same measures have a contradictory effect on the level of national product, population consumption, and tax revenues. The discouragement of foreign currency assets and liabilities introduced by the Central Bank influences the structure and cost of all financial instruments (including ruble ones), pressure on consumer loans reduces the level of consumption and employment, and restrictions on the mortgage portfolio influence not only economic but also social processes. The body that assesses the equilibrium impact of macroprudential measures cannot be limited to the functions of the Central Bank alone, otherwise it is difficult to assess how balanced the payment of the economy, population, and budget for financial stability is.

The closest in terms of organizational capabilities for a comprehensive assessment is the National Financial Council, which, instead of the Board of Directors of the Central Bank, can make final decisions in this area.

Sometimes, the discussion of functions is reduced to assessing the effectiveness of the body that carries them out, or assessing the concentration of powers in one organization. In relation to the Central Bank, this approach is not the most productive. Its functions should not be redistributed, but supplemented by a partnership of the market, business and government in areas that will create “added value” due to goal-setting that is not included in the perimeter of the Bank of Russia’s goals established by law.

The author is a professor at the Banking Institute of the Higher School of Economics

Functions of the Central Bank: Partnership Instead of the Guillotine