Before the financial crisis that erupted in the world in the second half of 2008, the Russian banking sector was developing quite dynamically and was one of the most stable. This statement is supported by the fact of a steady increase in the total assets of the system, the amount of available funds transferred to organizations of various kinds and to individuals as loans, and the profit received as a result of these operations. The crisis and the subsequent sanctions in 2014 somewhat weakened the financial stability of the state as a whole, but our country has successfully coped with much greater difficulties in its history.
Collateralized by loans
The banking system of Russia began its formation during the time of Empress Anna Ioannovna. She was the first to agree to provide loans from the bowels of the coin office secured by jewelry to private individuals. A loan was issued for thirty-six months at eight percent per annum. Before Anna, all Russian tsars supported the centuries-old ban on providing loans to the population. Devastating interest could lead to the impoverishment of certain sections of society, and there would be little use for impoverished borrowers for the state treasury. But the establishment of the first official bank occurred much later, in 1754, when Elizaveta Petrovna ruled the country.
At that time, the credit banking system of Russia was available exclusively to landowners and gave the right to receive a loan secured by land. It was formed with the aim of awakening an entrepreneurial spirit in a lazy noble society. Elizabeth was a worthy successor to her father, who in every possible way encouraged the desire of enterprising people to organize private production. Until the death of the empress, and then in the short period of the reign of Paul the First, the bank established by Elizabeth successfully functioned.
Its reform was already in the era of the reign of Catherine the Great. In 1786, the government established the State Loan Bank, which began to accept deposits from the population. There was nothing like this in Russia before. And the prerogative to use his assets belonged to the state. And only a small part of the funds as insignificant loans went to support the entrepreneurship of the nobility and merchants.
Copper Bank and Savings Bank
In parallel with the work of Anna Ioannovna's loan institution, the Copper Bank functioned in St. Petersburg in 1758. Its feature was that he issued loans with copper money, and accepted the return of borrowed funds in silver. The difference in the cost of coins formed a profit and resembled a kind of current interest system. At that time, paper notes did not yet exist in Russia. Copper, silver and gold were minted at the mint.
Everything changed in 1769 during the reign of Catherine the First. The development of the banking system in Russia began with the release of new money. Paper rubles - notes were entered into circulation. State Loan and Copper banks specialized exclusively in coins. There was a need to create an institution that would control the circulation of banknotes, carry out timely replacement of worn out ones, which happened very often, since the population was not yet used to the careful use of paper as payment for goods. For these reasons, soon assignment banks were formed.
The next round in the formation of the banking system of Russia was the development of savings banks. A large financial organization that we all know as Sberbank leads its history from them. His first cash desks were organized in the two most significant cities of the state - Moscow and St. Petersburg. A landmark event occurred in 1842.
From commercial to state
At that time, a rather insignificant role by state standards was played by the Commercial Bank created in 1817. Its working capital was used mainly by the merchants. However, it was he who was subsequently destined to transform into the State Bank of the Russian Empire. The formation and subsequent rapid development of a new financial institution coincided with the period of the abolition of serfdom. The number of industrial enterprises was rapidly growing in the country, which significantly influenced the prospects of the Russian banking system. If until 1860 about 20 financial institutions operated on the territory of the state, in the next few years their number more than doubled. Loans to the population were offered by both joint-stock commercial and land banks.
In 1897, Minister of Finance Sergei Witte carried out a monetary reform, which gave the State Bank of the Russian Empire new powers. The institution performed the function of managing the country's monetary policy, and carried out operations reminiscent of the current issue. The banking system of Russia has become increasingly important in the management of the country. She was assigned the role of the main financial institution, which she retained after the October Revolution. The nationalization of all credit organizations concentrated the collected funds in the People's Bank of the RSFSR, transformed from the State. In 1922, it was renamed the State Bank of the USSR. The commercial road to the general financial sector was closed. They were again able to become a single system only after almost 80 years.
Is it not our gold?
Russian tsars began to keep their savings in foreign banks since the reign of Alexander the Second. According to historians, it was he who provided America, in agreement with Abraham Lincoln, with 50 tons of gold to create a neutral currency capable of settling foreign trade operations. The two politicians intended in this way to stop the British Empire’s plans to form the World Bank and get ahead of it along the way. But Alexander was not destined to see the result of his efforts. Soon he was gone, and Russia returned to this issue already with the accession to the throne of Nicholas II. There is a version that for the formation of the US Federal Reserve in 1913, our last emperor shipped several ships of the same gold. The theory is controversial, not documented, but there are also explanations for this.
The outbreak of World War I diverted the attention of the Russian Tsar from creating a new monetary unit, and then he was no longer up to gold - a series of revolutions led to the overthrow of the autocracy and the speedy execution of the once-ruling family. The subsequent organization of the banking system of Russia was aimed at solving internal problems. Moreover, in America, the new president Woodrow Wilson gave the Fed to private hands, which did not intend to give Russian gold to anyone, even its real owners. The debate about whether this was actually the case is still ongoing. Historians are eager to find documents confirming their version in the archives and themselves do not believe that they have been preserved. But that such papers were, no doubt.
The central bank decides everything
By 1990, the State Bank of the USSR underwent several transformations. In its structure were republican branches, each of which was directly subordinate to the central apparatus. A year and a half before the official collapse of the USSR, the Central Bank of the Russian Federation was created on the basis of the Russian Republican Bank . He retained his name and mission to the present day. His powers are currently dominant in the structure of the banking system of Russia. Under his leadership and control are:
- management of gold and foreign exchange reserves of the state;
- formation of rules for conducting banking operations;
- vesting credit organizations with certain functions;
- revocation of licenses for the right to conduct banking activities;
- cash issue;
- the establishment of immutable economic standards for all credit organizations of the Russian Federation and much more.
In other words, the Central Bank or the Bank of Russia is the financial system of the state itself. Under it are all credit institutions operating in the territory of the Russian Federation and their representative offices, regardless of their membership in the state apparatus. The modern banking system of Russia, headed by the Central Bank, develops and establishes legislation that applies to all financial institutions, forms a deposit insurance system, and settles between independent payment systems. It is in its competence to develop modern banking technologies that make it possible to secure all existing business processes, training and retraining of employees of the financial sector through specialized educational institutions that are part of a single banking system. Everything related to money transactions is under the control of the Bank of Russia.
Three-tier banking sector model
Until 1995, when the Federal Law “On Agricultural Cooperation” was adopted, there was a two-tier banking system in Russia. And since 2001, after the signing of the Federal Law "On Credit Consumer Cooperatives", it has firmly switched to a three-level model. The lower, third stage, just formed two new structures. On the second are universal commercial banks and non-bank credit organizations. Their number and assets are constantly changing due to the opening of new and closing of old representative offices and branches throughout the country. All foreign banks operating in the Russian Federation are at the same level.
The first level is the Bank of Russia in the banking system and all its direct structural divisions. Despite the fact that it is not a public authority, all state institutions, without exception, are involved in the implementation of its functions, and the Central Bank exercises control over all financial transactions carried out. It has a fairly branched structure. It includes the central office, more than twenty departments, about sixty main departments of MSTU Bank of Russia, about two dozen national banks, as well as about a thousand cash settlement centers. Features of the banking system of Russia in its three-level model, the lower levels of which have much larger assets than the upper, dominant. So, agricultural and credit consumer cooperatives have a total cash reserve of more than 30 billion rubles. Whereas the Central Bank, it is almost two times less.
Narrowed geography
The density of activity of credit and banking institutions in Russia is about thirty points for every one hundred thousand people. This is calculated on the total number of all residents of the state from Kaliningrad to Vladivostok. The same density of similar objects is observed in European countries. But unlike the West, in the Russian Federation, banking institutions are distributed unevenly. Almost half of them are concentrated in Moscow. And the share of capital facilities accounts for three quarters of the total assets of all domestic credit organizations.
But the problems of the banking system of Russia are not only in the uneven territorial distribution of financial institutions and the funds concentrated in them. Currently, there are about seven to eight hundred credit organizations operating in the country that have insignificant equity capital and make scanty profits on circulating operations. They can be described as dwarf jars. And there are about two hundred large financial institutions in which more than 90% of all total assets are concentrated. Of these funds, almost half is in the hands of just a few banks, making up the top five. The share of Sberbank of Russia is a quarter of the 90% mentioned. Both on a territorial and on a capital basis, the distribution of funds in the country is extremely uneven.
Pyramid Crash
The establishment of credit organizations that generate income for investors through new income from the same investors, and not from a profitable investment of capital, is by no means the know-how of an enterprising domestic fraudster Mavrodi. In the mid-90s, he created the MMM financial pyramid, the most successful in the history of Russia. In the same years, the similar "Lord" and "Russian House" Selenga "functioned, but the number of ordinary people affected by their activities was much less. And Mavrodi managed to deceive about 15 million people, against the two and a half million involved in the "Russian house" Selenga ". These banks in the banking system of Russia did not play any significant role. They only collected the deposits of the population under huge dividends, and when, according to the founders, a sufficient amount of money was concentrated in their hands, they collapsed the entire pyramid, leaving investors with nothing.
The first similar scheme of deceiving the population was tested back in 1717 in France. Over the three years of operation, the institution managed to involve so many people in its activities that after the collapse of the bank, the entire economy of the state suffered. In a new story, wretched fraudsters have managed to repeatedly scam in the United States more than once. In 1920, by Charles Pontius with his company The Securitiesand Exchange Company. And in the mid-90s, Bernard Madoff. His financial pyramid Madoff Investment Securities today is considered the largest of all ever operating. It lasted for almost 15 years and managed to attract about 17 billion US dollars. It is difficult to distinguish an operating bank from a pyramid, but it is possible. And yet, despite all the obvious signs of fraud, a huge part of the population is becoming a victim of money swindlers.
Microloan and macroprofit
The next type of dubious banking activity is the organization of a quick loan. Microfinance institutions successfully operated in the Soviet Union until the thirties of the last century. Since they carried out the outflow of consumers from state credit organizations, they were liquidated. The interest of the owners of substantial monetary assets in the structure and activities of microfinance credit cooperatives in Soviet Russia has revived closer to zero. And institutions began to appear in the country, allowing the population to receive quick loans within 15 minutes. Naturally, at a substantial percentage.
At the beginning of the new century, the state of the banking system of Russia was unstable due to the protracted crisis in the industrial sector. Production has just begun to revive after a collapse in the early 90s. The slow growth of assets did not allow the population to obtain the necessary loans from state and commercial banks. Positive approval for obtaining a loan received only a few lucky ones. The only way out for the majority of the country's population was the establishment of microloans. Demand for them increased, the emergence of new institutions was not long in coming. Today, there are more credit points where you can take a loan at 700% per annum than the cash rooms of large banks. Microfinance institutions bring tremendous income to their founders.
In the grip of sanctions
With the annexation of Crimea, the banking system of the Russian Federation faced great difficulties in its activities. The sanctions policy of Europe and the United States has limited the flow of capital into the Russian economy, foreign investors began to leave the disgraced country en masse. Against the backdrop of the recent global financial crisis, from which it was not possible to finally recover, sanctions were almost a disaster for the banking system. Over the past decades, domestic oligarchs have preferred to keep their assets in offshore or more closed foreign banks. Capital turnover was steadily declining, financial institutions could not properly fulfill their obligations.
In the same period, the shortcomings of the Russian banking system were exposed. The mechanisms of financing enterprises, the principle of pricing in the bowels of the stock exchange, investment in foreign currency, and not in the domestic economy, more testified to the desire of banks to earn money for themselves, and not for the country. Hence the high interest rates on loans. In addition, the ruble appreciation policy continues to be quite ineffective and leads to further inflation growth. The banking system of Russia, unfortunately, is divorced from the needs of the population and works mainly for itself.