The Ministry of Finance spoke about the emergence of an offshore ruble market

The Ministry of Finance drew attention to the emergence of an unofficial ruble exchange rate – this is an unusual “phenomenon” for the Russian economy, Director of the Department of Financial Policy of the Ministry of Finance Ivan Chebeskov told reporters on the sidelines of the Moscow Financial Forum, a Vedomosti correspondent reports. “The reality is that there already exists an unofficial market for the ruble offshore,” he said.

Rubles are taken abroad, where they are exchanged for foreign currency, some of the rubles are returned back to the Russian domestic market, some are not, Chebeskov pointed out. The authorities are jointly trying to build balanced regulation to adapt to this reality.

Chebeskov did not support the “membrane” mechanism. The idea of ​​​​developing an “analogue of the Chinese model”, when there is a “membrane” between the domestic and foreign ruble markets, was expressed on September 25 by the Minister of Economic Development Maxim Reshetnikov. In his opinion, this can solve the problem of high inflation and volatility of the ruble, but “this is not a question of two rates, by no means.”

If we consider the “membrane” as a limitation on the floating exchange rate of the ruble, then this is inappropriate, Chebeskov believes. “We’ve been getting to this for a very long time. [к плавающему курсу], this is a significant achievement of the entire macroeconomic policy of our country, so any innovations should not, in our opinion, limit this floating exchange rate. The entire economy functions on this basic principle, monetary policy works, imbalances in the economy are reduced,” he listed.

Segmentation, including the use of so-called “membranes,” will lead to multiple exchange rates and negative consequences for the financial market as a whole, a representative of the Central Bank previously told Vedomosti. The Chairman of the Central Bank recalled that China has a controlled exchange rate, as well as a plurality of interest rates. In addition, the country has restrictions on the movement of capital, she added.

Chebeskov also spoke about the introduction of currency regulation. According to him, the measures proposed by the Ministry of Finance, the Central Bank and the Ministry of Economy are different, and the departments together with the regulator are trying to find a balance. The Ministry of Finance advocates more stringent decisions in currency control than the Bank of Russia, Finance Minister Anton Siluanov said in early September.

The renewed discussion about currency restrictions is “largely a government decision,” Nabiullina said on September 15. Introducing new capital control measures now may be ineffective, she believes, since it is better to influence capital flows and the ruble exchange rate not through administrative, but through economic measures. Direct control only works for a limited time, Nabiullina noted.

One of the foreign exchange control measures that is being discussed is the mandatory sale of foreign currency earnings. But today, 42% of payments for exports are made in rubles, the head of the Central Bank said. At the same time, the share of sales remains constant, and exporters can buy currency back in the volumes they deem necessary.

Another measure under discussion is limiting the transfer of funds abroad, including ruble ones. But, according to Nabiullina, closing new loopholes, for example, by limiting the withdrawal of rubles abroad will only lead to the growth of ineffective restrictions like a snowball: “We will close something, business will find a new gap, and so on ad infinitum.” The withdrawal of funds this year was much less than last year, the Central Bank said: over eight months, the outflow amounted to $28.6 billion, while a year ago it was $195.1 billion.

The chairman of the supervisory board of the Moscow Exchange, Sergei Shvetsov, did not support the abuse of currency regulation. Such measures should be introduced to solve tactical problems, and none of the currency regulation norms work for more than six months, he said at the Moscow Financial Forum. The market will always find ways to circumvent any currency control measures, which also applies to the mechanisms of sanctions restrictions. “This makes the market opaque, more expensive, and reduces the level of competition in the market. Therefore, it is very dangerous to abuse currency regulation. But the most important thing is that this will not be effective,” he states.

For a long time, one of the reasons for the attractiveness of the Russian capital market was the lack of foreign exchange regulations relative to other countries, Shvetsov added. Exchange control measures should be compensated by high profitability. But in Russia “there are not many projects that have extremely high profitability for foreign capital to close its eyes and invest money in such projects,” the top manager pointed out.