Siluanov spoke about the discussion with the Bank of Russia on currency control

The Ministry of Finance advocates tougher measures against currency control than the Bank of Russia, Finance Minister Anton Siluanov said during a speech at the conference “10 years of the mega-regulator: yesterday, today, tomorrow.” According to him, the Ministry of Finance and the Central Bank are looking for consensus on this issue.

“Earlier, the Central Bank was a very strict follower of defending the topic of currency control. The Ministry of Finance was more liberal. Now it has changed: we are in favor of tougher measures regarding the control of flows, since the situation is known. The Central Bank, on the contrary, has taken a liberal position here,” Siluanov said, adding that the parties will bring their positions closer and find a “joint solution.”

The chairman of the Central Bank, Elvira Nabiullina, objected that one can talk a lot about currency control, because “the devil is in the details.” In her opinion, there should be such currency control measures that are mirror-like, in response to anti-Russian restrictions. Nabiullina noted that many fear capital outflows, that is, a bias in the preferences of economic agents in favor of savings in foreign assets, including foreign currency deposits within Russia.

“Currency restrictions should not create difficulties for our economic entities, agents who, with great difficulty, but find ways to both make payments and conduct economic activities. Therefore, within the framework of this picture, you need to look for what needs to be adjusted here (in terms of currency control – Vedomosti),” added the chairman of the Central Bank.

As the chairman of the Central Bank later explained to journalists, “the measure to return the mandatory sale of foreign exchange earnings may not give the effect that is expected from it.” This is due to the fact that exporters already receive a significant part of the proceeds in rubles. In addition, if a company sells part of its foreign exchange earnings, it “can already buy it back the next day – which means that the balance of supply and demand does not change in the market.”

The main measure is to increase the attractiveness of the ruble, so the increase in the key rate will have its effect on the exchange rate, albeit with a lag, added Nabiullina.

However, the Central Bank plans to extend the current restrictions on currency transactions in September, added the chairman of the Central Bank.

During the meeting, the head of the Bank of Russia noted that “before all these events” (before the start of the special operation and the imposition of sanctions in February 2022 – Vedomosti) agreed with the Ministry of Finance that it is necessary to liberalize currency control measures – we are talking about mandatory repatriation and sale foreign exchange earnings. “But they were applied in the spring in conjunction with other measures to stabilize the situation on the financial market,” the head of the regulator added.

In July, the dollar was traded on the Moscow Exchange at a rate of about 90 rubles/$. At the same time, since the beginning of August, the ruble began to weaken and on August 14, for the first time since March, the exchange rate exceeded 101 rubles/$. After the Bank of Russia announced an extraordinary meeting at which it raised the rate by 3.5 percentage points to 12% on August 15, the rate rolled back by 7% to 94.90 rubles / $ (as of August 25). At the same time, on August 31, at the close of trading, the dollar was already worth 96.025 rubles.

The authorities have decided not yet to establish standards for the sale of foreign exchange earnings by exporters and not to impose restrictions on the movement of capital – such agreements were reached at a meeting of President Vladimir Putin with members of the government and the chairman of the Central Bank. Vedomosti wrote about this on 16 August. The Cabinet of Ministers managed to informally agree with exporters to increase the sale of foreign exchange earnings, so for the time being it was decided to limit themselves to monitoring their actions.

As Vedomosti sources explained, there was a consensus among the meeting participants that tightening currency controls is an extreme measure that can only temporarily affect the exchange rate, while masking the fundamental reasons for the weakening of the national currency.

The government introduced the obligation to sell foreign exchange earnings at the end of February 2022. At that time, exporters had to change 80% of the income from all foreign trade agreements within three working days from the day they were received. Later, this share was reduced to 50%, and the period was increased to 60 days. Last summer, all restrictions were lifted. At that moment, the dollar on the Moscow Exchange fell below 55 rubles.

Now in Russia there are currency restrictions for individuals. Citizens can withdraw from their currency accounts up to $10,000 (or the equivalent, if we are talking about other foreign currencies) in each organization, but on condition that the deposit is opened before March 9, 2022. At the same time, an individual will not be able to receive more than $10,000 from several accounts in one bank. If the account is opened after March 9, then you can receive money from it only in terms of rubles at the market rate on the day of withdrawal. On August 1, the Central Bank extended the restrictions until March 9, 2023.