Reserves were divided into currencies – Newspaper Kommersant No. 48 (7493) dated 03/22/2023

For the second time in a row this year, the Bank of Russia has been increasing the amount of reserves for foreign currency liabilities of banks. But the regulator for the first time will give a discount on reserves in the currencies of friendly countries. These include, for example, the increasingly popular yuan, lira and dirhams.

Starting from April, for the first time, banks will differ in the amount of reservation of foreign exchange obligations, depending on whether they are nominated in a friendly or unfriendly currency. On the differentiation of reserve requirements of the Central Bank announced 21 March. Since April, they have been increasing for the currencies of unfriendly countries by 0.5 percentage points, up to 7.5% (an exception for banks with a basic license, which can not create such reserves), and in other currencies they are reduced to 5.5% .

The goal is “to stimulate a change in the structure of foreign exchange liabilities … in favor of the currencies of friendly countries and at the same time maintain conditions for further general devaluation of bank balance sheets.”

This is the second step in changing reserve requirements this year. In particular, since March, the required reserves have been raised by two percentage points to 7%. At the same time, the Central Bank did not differentiate the required volume of reserves depending on the currencies. Prior to the outbreak of hostilities in Ukraine and the crisis that followed, reserve requirements were even higher. Thus, from August 2018 to the beginning of March 2022, the reserve ratio for a number of obligations was 8%. It was sharply lowered as a mitigating measure to 2%, but has been gradually increasing since May 2022.

Based on the latest data, the share of foreign currency in the corporate loan portfolio of banks by the end of February 2023 was 16.4%, in retail – 0.1%, in the structure of client funds, it is estimated at 19.6% and 10.9%, respectively. By the beginning of 2023, the share of bank assets in foreign currency was 15.1% ($290 billion), liabilities – 14.8% ($259 billion). At the same time, the share of client funds in yuan in banks at that time was about 2%, and yuan loans – about 1% (see Fig. “Kommersant” from March 7).

Despite setting up payments in non-yuan friendly currencies that banks are now actively pursuing, the top 3 currencies in the mix are still the dollar (which accounted for about or more than half), the euro and the yuan. This follows from the currency structure, which was published by the Bank of Russia in the review on the development of the banking sector for 2022. The decrease in the share of “toxic currencies” is proceeding at a fast pace due to the conversion of corporate loans.

For the first time in its history, the Bank of Russia divides the volume of reserves into different foreign currencies, said Mikhail Matovnikov, head of the financial analytics center at Sberbank. In his opinion, this is a completely logical step: “It was surprising that the Bank of Russia did not introduce currency differentiation immediately with the increase in required reserves in March.” However, he believes, now there is no need to expect a large discouraging effect on the volume of work of banks in unfriendly currencies from this measure, since lending in them is not actively conducted any more.

Alexey Voylukov, Vice President of the Association of Banks of Russia, notes that last year the ADB asked not to go for a complete devaluation, but to introduce a differentiated approach to working with friendly and unfriendly currencies. In his opinion, the increase in the rates of deductions to the mandatory reserve fund is a fairly conservative tool that will smoothly stimulate banks to lend in friendly currencies and discourage lending in unfriendly currencies.

Olga Sherunkova, Maxim Buylov