In most countries of the world, a national bank has been established that is responsible for the functioning of the country's financial system. In the Russian Federation, the Bank of Russia is vested with such powers. The CBR is in charge of the widest range of tasks. The stability and pace of development of the country's economy largely depend on the success of their solution. What are the specific objectives of the Bank of Russia? What is its organizational structure, and how does it contribute to the institution's achievement of its objectives?
General information about the Central Bank of the Russian Federation
The Bank of Russia is a legal entity that operates independently of any government bodies. However, its activities are accountable to the State Duma, and the authorized capital and other assets of the organization are the property of the state. The objectives, functions and operations of the Bank of Russia are generally similar to those of national banks in other countries of the world.
In particular, the CBR is the only institution that has the right to issue national currency, as well as organize its circulation in the country's economy. The Central Bank of the Russian Federation is not considered the subject of tax reporting; it incurs expenses from recoverable income. The purpose of the Central Bank of the Russian Federation is not to facilitate the fulfillment of government obligations, and vice versa. Unless, of course, a separate agreement provides otherwise.
Now consider the essence of the key objectives of the main banking institution of Russia.
The main objectives of the Central Bank of the Russian Federation
In accordance with the provisions of the Federal Law No. 86 dated 06/10/2002, which governs the activities of the Central Bank of the Russian Federation, the main objectives of the Central Bank of the Russian Federation are as follows.
Firstly, it is the protection of the national currency of Russia - the ruble - against exchange rate fluctuations and speculative impact. Secondly, it is the modernization and development of the state banking system. Thirdly, ensuring the functioning of payment mechanisms in the state economy.
Consider these objectives of the Central Bank of the Russian Federation in more detail.
National currency protection
In most modern states, the exchange rate is formed mainly on the basis of a freely functioning mechanism of supply and demand in the international market. How much the ruble costs is thus determined under the significant influence of external economic factors.
The goals, objectives and functions of the Central Bank of the Russian Federation are largely aimed at identifying among these factors those that affect the national currency of the Russian Federation negatively, do not have a market nature. Even if their action is completely legitimate, but the activity does not correspond to the interests of the state, the Bank of Russia can oppose them. How? By what methods?
First of all, this is the holding, if necessary, of currency interventions - sessions of purchases or sales of available national or foreign currency in order to increase or, conversely, reduce the level of its supply in the market. By creating, for example, an oversupply of dollars in that part of the market in which the ruble is traded, the Central Bank of the Russian Federation can help to reduce its exchange rate. In turn, the national currency of the Russian Federation is getting more expensive.
However, now the policies and objectives of the Central Bank of Russia involve limited intervention in market mechanisms for the formation of the ruble exchange rate. This is mainly due to the fact that the state’s monetary reserves are the main resource for conducting the Central Bank of the Russian Federation foreign exchange interventions. Due to the influence of crisis trends, the leadership of the Central Bank of the Russian Federation prefers not to spend them on interference in market mechanisms that shape the course.
Banking system development
The objectives of the Central Bank of the Russian Federation include maintaining the functioning and development of the national banking system. The activities of the Central Bank of the Russian Federation and methods for solving the problems set in this case can be represented in a wide range. Which of them can be called key?
Firstly, it is the regulation of banks. The Central Bank of the Russian Federation issues various legal acts regulating the procedure for providing credit and financial institutions operating in the state with services to the population and organizations; establishes financial and tax reporting standards for relevant entities. This is necessary, first of all, in order to protect the interests of customers of banks - depositors, holders of settlement accounts, borrowers.
Secondly, this is a policy related to calculating the optimal value of the key rate. This financial indicator mainly determines how expensive a private bank loan will be with the Central Bank of the Russian Federation for the subsequent use of borrowed funds in its core business. For example, related to the provision of own loans. If the key rate set by the Central Bank of the Russian Federation is high, then loans issued by non-state banks are getting more expensive.
Thirdly, the Central Bank, carrying out activities to maintain the functioning of the national banking system, organizes monitoring of key operations with the help of territorial treasury institutions. A significant part of financial transactions goes through them and is carried out according to the rules of the Central Bank of the Russian Federation.
Maintenance of payment mechanisms
The objectives of the Central Bank of the Russian Federation also include ensuring the functioning of payment mechanisms within the state. The fact is that the most important function of modern financial institutions is not only deposits, loans and cash management services, but also the facilitation of financial transactions involving individuals, representatives of private business, government agencies, international entities.
A citizen of the Russian Federation or a foreigner should be able to make settlements with other people and organizations through various tools: personal accounts, bank cards, through channels of non-bank credit organizations. Monitoring the functioning of the respective channels is one of the tasks of the Central Bank of the Russian Federation.
The work of the Central Bank in this direction as a whole is carried out through the same mechanisms that are relevant for the previous direction of the Central Bank. This is due to the operation of the banking system. The Central Bank of the Russian Federation publishes rules governing transactions carried out through various channels, monitors these operations. The work of non-bank credit organizations that use the state’s payment infrastructure is largely dependent, like the activities of ordinary credit and financial institutions, on the key rate of the Central Bank of the Russian Federation.
The objectives of the Central Bank of the Russian Federation (Bank of Russia) considered by us imply the fulfillment of certain functions by it. We study their specifics.
Functions of the Central Bank of the Russian Federation
The Central Bank of the Russian Federation performs the following main functions:
- participates together with the Government of the Russian Federation in the development of priorities of state policy in the field of finance;
- carries out the sole issue of the ruble, ensures its circulation in the economy of the Russian Federation;
- provides funds to non-governmental credit organizations in the form of loans, provides refinancing of loans issued;
- determines the rules in accordance with which financial transactions are carried out in the Russian economy;
- sets the standards for various banking operations;
- monitors and services transactions on the budget accounts of the Russian Federation;
- Manages in accordance with the established procedure the gold and currency reserves of the state;
- carries out registration of financial institutions, issues licenses to them or, on the contrary, cancels them if it finds violations of banking legislation by these institutions;
- pursues a foreign exchange control policy;
- defines the rules governing the settlements of Russian citizens and organizations with international entities;
- establishes accounting and financial reporting standards within its competence;
- determines the exchange rate of the national currency in the international market and carries out its timely publication;
- participates in calculating the balance of payments of the state economy;
- regulates the activities of currency exchanges;
- carries out analytical work in the part of the study of economic processes at the level of the state economy as a whole, as well as in the regions;
- participates in protecting financial interests of bank depositors.
Having considered the goals and functions of the Central Bank of Russia, we can study the features of the organizational structure of the main financial institution of the Russian Federation. For starters, we examine the basis of what principles determine the order of organization of the Central Bank's activities in terms of the distribution of the functions of the institution among the internal divisions of the Central Bank of the Russian Federation.
The structure of the Central Bank: principles of institution management
As we already know, the objectives of the Central Bank of the Russian Federation include protecting the currency of the Russian Federation, ensuring the operation of the banking system and payment mechanisms in the state economy. Achievement of each of them presupposes, first of all, coordination of the activities of the Bank of Russia with the interests of other subjects of state regulation of the economy, for example, with the Government of the Russian Federation. This option forms one of the key principles of the Central Bank of the Russian Federation - interagency cooperation.
The activity of the main banking institution of the Russian Federation involves solving problems not only in the federal jurisdiction, but also at the regional level. Therefore, representative offices of the Bank of Russia operate in all constituent entities of the Russian Federation. Their work is carried out taking into account the principle of centralization, when all departments of the institution are accountable to the main office and operate in accordance with the regulations developed by him.
Above, we noted that the goals and functions of the Central Bank of the Russian Federation are closely related. Hence, another principle of the institution's work is the functional specialization of units. In each of the internal structures of the bank, specialists with the highest competence to solve the tasks work.
Another principle of the CBR is the separation of decision-making powers between the central office and regional institutions. We said above that the work of the Bank of Russia structures in the regions is carried out in accordance with the regulations developed by the central apparatus of the Central Bank of the Russian Federation. However, the regional branches of the main banking organization of the Russian Federation still have some independence, and this is the implementation of the principle in question in practice.
The structure of the Central Bank of the Russian Federation: organization management institution
Let us examine now what key bodies the central bank management structure is represented. These include:
- National Banking Council.
- The central apparatus of the organization.
- Board of Directors of the Central Bank of the Russian Federation.
- Territorial structures.
- RCC.
- Military units.
We study their specifics in more detail.
National Banking Council
The main structures of the Central Bank of the Russian Federation, ensuring the functioning of the organization, include the National Banking Council. He is a collegial body of the institution. We noted above that the purpose of the Central Bank of the Russian Federation is not to assist the state in fulfilling its obligations, as well as the fact that the work of the main Russian financial institution is not accountable to the authorities.
However, on the example of the National Banking Council, one can trace that in practice the dependence of the Central Bank on the state can be significant. The fact is that representatives of the Council of the Federation, the State Duma, the Government of the Russian Federation, and also persons appointed by the President of the Russian Federation work as part of the National Council of the Central Bank. The Chairman of the Central Bank of the Russian Federation also works as part of the structure of the Central Bank under consideration.
Board of Directors
The next most important organ of the Central Bank is the Board of Directors. It is considered the highest executive structure of the bank and determines in which areas the activities of the Central Bank of Russia will be concentrated, goals and guidelines of the institution. Its formation has a certain similarity with the procedure for the inclusion of certain persons in the National Banking Council.
So, in the structure under consideration of the Central Bank of the Russian Federation, the Chairman of the Central Bank works, as well as 12 ordinary members who are constantly working in the bank. The composition of the Board of Directors of the Central Bank of the Russian Federation is formed with the direct participation of the State Duma and the President of the Russian Federation. Once again, one can trace the fact that the dependence of the Central Bank on the state in practice is still significant, despite the fact that the Central Bank is legally an independent organization from the authorities.
The Board of Directors of the Central Bank of the Russian Federation, which determines the goals of the Bank of Russia’s activities, functions and operations, must meet at least once a month. This structure makes decisions regarding the issue of the ruble, setting standards for non-state banks, compiling a list of bills and other securities used to secure loans from the Central Bank, setting interest rates, limits on market operations, and current loans, for example, considering the possibility of their extension. The Board of Directors of the Central Bank exercises oversight as well as control functions.
Central apparatus and territorial structures
The objectives and functions of the Central Bank of the Russian Federation are initially within the competence of the Central Office of the institution, but subsequently, within the framework of established mechanisms, they are delegated to the level of territorial structures of the Central Bank of the Russian Federation. In addition, CA is represented by various functional units that are responsible for solving problems of a particular sphere. These structures are accountable to the Board of Directors and the head of the Central Bank of the Russian Federation in terms of the implementation of their resolutions. In the regions, the functions of the Central Bank, in turn, are performed by the territorial divisions of the main banking organization. Their key task is the implementation of common approaches in implementing the financial management policy adopted at the federal level.
RCC and military units of the Central Bank of the Russian Federation
We noted above that the objectives of the Central Bank of the Russian Federation include maintaining the functioning of the state banking system. Among the main structural units having the competencies necessary to achieve the corresponding goal are cash settlement centers of the Central Bank of the Russian Federation.
These institutions are divided into the parent, operating in areas, as well as inter-district. They carry out work related to the implementation of interbank transactions, servicing non-governmental credit organizations and budget accounts.
The next most important type of institution included in the structure of the Central Bank of the Russian Federation is military units. Their task is to service financial transactions, the subjects of which are various institutions within the armed forces of the Russian Federation.
So, we examined the key functions of the Central Bank, the goals of the Central Bank of the Russian Federation and methods for their implementation. The main bank of Russia is a multifunctional institution, complex in structure, having a wide range of competencies in the financial sector.
On the one hand, the CBR is legally independent from the authorities, on the other hand, it is formed with their direct participation. In addition, the Central Bank carries out its activities taking into account the interests of other government agencies.