The country's main financial institution is the Central Bank of the Russian Federation, Moscow. This is a special organization whose main goal is the regulation of financial and credit systems. The Central Bank of the Russian Federation (Moscow, Neglinnaya Street, 12) is the link between the executive branch and all areas of the economy.
This institution was established on July 13, 1990. It is the successor to the GB of the USSR.
What is an institution and to whom does it belong?
The Central Bank does not affect the activities of individuals. The main counterparties are all banks in the country, regardless of ownership. It is a legal entity, has equity and the Charter. But it is wholly owned by the Federal Government. In other words, it belongs to the state.
Functions Performed
The Central Bank of the Russian Federation is an organization whose responsibilities include more than twenty analytical and practical functions:
- Monopoly emission (issue) of cash.
- Establishment of settlement rules and control over their implementation.
- Design and development of the concept of monetary policy.
- Development and implementation of settlements with non-residents.
- Control over banking operations.
- Payment of deposits to individuals in the event of bankruptcy of financial institutions that were not part of the mandatory deposit guarantee system.
- Serving budgets of all levels. In some cases, extra-budgetary funds.
- Registration of credit organizations and partnerships, issuance, as well as suspension and revocation of licenses, control of activities.
- Registration and control of non-state pension funds.
- Storage of cash reserves of commercial banks.
- Issue and registration of securities. Reporting on the results of the issue.
- Countering the spread of insider information (obtained by criminal means) and market manipulation.
- Lending to organizations and their refinancing.
- Management and control of payment systems.
- All banking operations necessary for the normal functioning of the institution.
- Administration of foreign exchange reserves.
- Regulation and control of currency activity.
- Operations of obtaining and servicing public debt, including obtaining a loan to cover the budget deficit.
- Remediation (recovery) procedure for problem banks.
- Setting exchange rates on the relevant banking day.
- Transactions and transactions agreed with the International Monetary Fund.
- Forecast and development of the balance of payments.
- Functions of banking supervision of credit and non-credit financial organizations, as well as banking groups, joint-stock companies and the corporate sector.
- Statistics of foreign investments.
- Analysis and forecast of the state of the economy.
Regional structure
The Central Bank of the Russian Federation has representative offices in each of the nine federal districts. In addition, there is a developed network of branches in almost every major city.
The most significant federal representations are the Southern Main Directorate of the Central Bank of the Russian Federation, as well as the Northwest and Ural branches.
What is the refinancing rate of the Central Bank of the Russian Federation?
One of the main tasks of the main financial institution is lending to the banking system. Refinancing rate of the Central Bank of the Russian Federation - the interest rate in the calculation of one calendar year, which is subject to reimbursement by credit organizations for the loan. This value is subject to constant adjustment depending on the situation on the country's money market, as well as on inflation and gross domestic product. This is the main instrument of macroeconomic regulation in the state.
Central Bank Tasks for Inflation
The task of the Central Bank of the country is to maintain a constant balance with the help of this indicator. Too high a value will undoubtedly stop the jump in prices, but at the same time slow down financial growth. Conversely, too low indicators will help saturate the economy with a lot of cheap money, but at the same time inflation becomes dangerously uncontrolled, which will inevitably lead to a change in the strategic planning model.
At the same time, the discount rate is an indicator for investors. Data can both attract and push off a potentially interested company. It is one thing when you can always count on the help of the country's banking system. And quite another - when for investment you need to use only your own funds. Risks grow accordingly.
Discount rates in the world
Currently, the refinancing discount rate set by the Central Bank of the Russian Federation is eleven percent per annum.
This is not the lowest rate in the world. So, the discount rate up to two percent is fixed by financial institutions of Denmark, Norway, New Zealand, Australia, Canada, Japan, Great Britain, the Eurozone and the USA.
In banks in Switzerland and Sweden, the key indicator is generally negative. These innovations are associated with almost zero inflation in countries. Export volumes have been catastrophically falling for a long time, which created a serious risk of cheaper national currencies - the Swiss franc and the Swedish krona. Also, this often led to a decrease in the interests of potential investors.
A negative discount rate implies that the country's institutions pay the Central Bank for storage services in its depositories. Developed countries are seriously considering the introduction of this innovation for the contributions of individuals.
The discount rate of the Central Bank of the Russian Federation during the activity
The refinancing rate of the Central Bank of the Russian Federation seriously fluctuated depending on the processes taking place in the country.
Since the formation of the new state, this indicator has changed significantly, sometimes several times a week.
Until 2003, it exceeded the value of twenty percent. The refinancing rate of the Central Bank of the Russian Federation in different periods reached up to two hundred and ten percent (in 1994, the value lasted until the end of April next year). In general, from June 1993 to July 1996, the value exceeded one hundred percent per annum. The coordinated efforts of the government and bankers allowed to gradually calm down the financial storm. And in June 1997, the value reached quite acceptable twenty-one percent. But a crisis erupted, and the default following these events repeatedly repeatedly strongly pushed the value up to one hundred and fifty percent. This indicator was recorded on May 27, 1998. But a week later he dropped to sixty.
From January 2004 to this day, the country's main indicator has not exceeded fifteen percent.
On June 1, 2010, a record was set that was set by the Central Bank of the Russian Federation - the rate was only seven point seventy-five hundredths of a percent.
Issue of money
One of the most important functions that the Central Bank of the Russian Federation implements is the issue of money - the release of funds into circulation, which increase their total mass.
The main institution’s tasks in this area are to control the amount of money in circulation, to exchange unusable (dilapidated) banknotes, as well as to timely change the design of banknotes to effectively counter counterfeiters.
It is difficult to overestimate this function of the Central Bank, because the ruble is the only possible means of payment in the country.
Money is issued in cash and non-cash.
The Russian currency is not backed by valuable metals, and also does not have other equivalence ratios.
Issue of cash ruble
Cash paper money represents denominations of five to five thousand rubles. They have all the necessary modern protective equipment - watermarks, protective thread, thin line patterns, microtext, fibers glowing in ultraviolet radiation, denomination with metallic paint, relief elements, color shades that vary depending on the viewing angle.
The minimum denomination of a coin issued by the Central Bank of the Russian Federation is one penny. The maximum is ten rubles.
They are minted at the Moscow and St. Petersburg mints from metals and alloys such as cupronickel, steel, copper, zinc, nickel, and brass.
Issue of non-cash money
This form of issue is the basis of non-cash accounts. The aim is to satisfy the necessary needs of market participants in working capital. Often the capital of the organization is not enough to perform a certain function. In some circumstances, additional money may be issued to complete the financial task. The process operates on the basis of a bank (deposit) multiplier.
This is a unique method, since the issue of electronic money, along with the Central Bank, can be carried out by banking institutions and even credit organizations. Of course, under the strict supervision of the supervisor.
It is extremely difficult to abuse the process, because such an issue is made solely for the purpose of lending to a market economy.
Bank of banks
The Central Bank of the Russian Federation performs a supervisory function over the entire banking system.
First of all, it is the issue of licenses. And subsequently - constant control over the activities of a business entity, its liquidity. If necessary, recovery is practiced by introducing a curator. The deprivation of the right to conduct foreign exchange activities or the complete cancellation of a banking license is carried out in case of impossibility to work in the financial market.
The Central Bank creates a favorable environment for the functioning of credit institutions, regulates cash flows and provides loans.
Conclusion
The activities of the Central Bank of the Russian Federation is an important component of the domestic economy. It is designed to maintain the financial stability of the country, using a wide range of opportunities for this.