"Those who are devoted to the Imperishable (the Impersonal Absolute) - who is the firm support of the world and is also undefinable, unmanifested, transcendent, motionless, eternal and all-pervading, - even they reach Me alone, striving with their senses controlled, and with mind tranquillised and set on the welfare of all". - Gita 12-3


















































VEDANTA MASS MEDIARussia and the global financial crisis  







Russia and the global financial crisis



      Oleg Mityatyev

     Some time ago, many MPs and Russians were shocked to learn that Russia's international reserves (gold and foreign currency) were deposited abroad. They wondered if this was wise, but soon agreed that investing reserves in reliable foreign securities and bank deposits was the only way to safeguard them.


     Central Bank governor Sergei Ignatyev has assured that the strategy of investing international reserves changed after the financial crisis had spread from the US to other countries. The bank has cut the share of dollar-denominated assets, including US mortgage bonds, and increased the share of the euro and European securities. Nevertheless, the financial crisis has bitten a large chunk off Russia's international reserves, which have decreased 24% from $597.5 billion in August to $453.5 billion by mid-November. Ignatyev said reserves dropped $97.6 billion in September and October, with $57.5 billion spent on maintaining the value of the rouble. The rest was lost to exchange rate fluctuations or spent on assistance to the banking system.


     Ignatyev refused to say if the Central Bank would continue to support the ruble at its current level to maintain income, or if it would gradually devalue it to maintain the international reserves. Unfortunately, lack of reliable information is motivating depositors to withdraw their ruble accounts to buy foreign currency, thereby delivering another blow to the banking system.


     Judging by what the two officials said in parliament, the Russian economic authorities plan to invest the reserves in the banking and real economic sectors.


     Ignatyev said the Central Bank had promised Russia's 250 largest banks to compensate their potential losses in the inter-bank loan market. The list of recipients may be subsequently increased.


     Russian finance minister Alexei Kudrin said 200-400 billion roubles ($14.5 billion) of the $134.6 billion Reserve Fund, which is part of the international reserves, could be used to increase assistance to the regions next year. In all, the government may take 500 billion roubles ($18.1 billion) or even more from the fund in 2009, he said. Even if the Reserve Fund does not grow on high oil prices, it would suffice for seven to 20 years, Kudrin said, using some unfathomable reasoning.


     Ignatyev said inflation would amount to 13%-14% in 2008, which is considerably more than the target figure. The previous government forecast of 11.8% annual inflation became reality on November 10. This means that the interest rates of commercial banks, which cannot be below inflation, will be very high.


     The CBR governor said there was a silver lining to this storm cloud, because high rates, which will also be applied to deposits, may help halt the flight of capital from the country and its banking system. The Central Bank has contributed to the process by raising its refinance rate by 1%, to 12% on November 12, thereby seriously worsening loan conditions in Russia.




     The writer is a RIA Novosti economic columnist




     RIA Novosti






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International Yoga Day 21 June 2015
International Yoga Day 21 June 2015























































































































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