Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting 14 June 2019
Today, the Bank of Russia has decided to cut its key rate to 7.50 % per annum.
We also revised our end-2019 inflation forecast downwards by 0.5 pp, to 4.2-4.7%.
Should our baseline forecast materialise, we hold open the possibility of a further rate cut at one of the upcoming Board meetings. We assume that we may shift to neutral monetary policy before mid-2020.
I will now highlight the factors we considered while making today’s decision.
First. There is a stable trend towards inflation slowdown. It is attributed to the Bank of Russia’s key rate decisions including the preemptive hike in the second half of last year. We passed the inflation peak of 5.3%, slightly lower than we expected, in March. Inflation slowing down from this lower peak is overall in line with our forecast. In the February-May period, prices rose by approximately 0.3-0.4% a month, seasonally adjusted. That means that the monthly growth pace has returned to the lowest readings since last August and stands near 4% in annual terms. Annual inflation fell to 5.1% in May, and came in at 5% precisely as at the beginning of this week. This dynamics is attributed to the following factors.
The effect of the VAT increase on inflation has run its course.
The ruble’s strengthening since the beginning of the year made an additional contribution to inflation slowdown. Higher oil prices and overall favourable conditions in financial markets helped. International investors’ interest in Russian assets recovered, which was the most distinctive in the OFZ market.
The agreements on retail fuel prices between the Russian Government and oil majors are continuing to play a significant role. Consumer petrol prices rose in May by 2.8% year on year, and their growth is likely to be moderate in the near future. That said, the new regulation in this market, in particular, the offsetting mechanisms (including reverse excise duties), is rather complicated. Currently, it is hard to accurately estimate its medium-term economic effectiveness, especially for scenarios providing for tangible oil price fluctuations.
Moderate domestic demand is also curbing inflation.
This calls for a deeper insight into the economy. This is the second most important factor that we took into account. Economic growth in the first half of the year has been lower than expected. We predicted that business activity might slow down somewhat at the beginning of the year on the back of the following factors: the VAT hike, a likely slowdown in growth of the global economy and demand for Russian goods and services, and the implementation period of the major national projects scheduled for the second half of the year. Some of these factors had a stronger effect than expected. In particular, budget expenditure dynamics.
We will be able to take a deeper insight into the economic growth slowdown after detailed GDP statistics are released. However, the 2018 data released in April and preliminary Q1 2019 estimates allow us to update our GDP forecast for this year. In particular, the revision is associated with lower export growth rates and a tempered outlook for growth in the global economy and external demand. We have left the forecast for consumer and investment demand unchanged in view of the expected rise in public expenses in the second half of the year. As a result, we have updated the 2019 economic growth forecast from 1.2-1.7% to 1-1.5%.
Third. Proinflationary risks have declined over a one-year horizon. First, we no longer expect any deferred effects of the VAT hike. Second, the US Fed consistently eased it rhetoric since the year start amid the expected slowdown of global economic growth. All else being equal, this constrains the risks of considerable capital outflow from emerging markets.
In March-April, we noticed that the risks of accelerated growth in prices of certain food products diminished. Overall, they remain moderate, though current food inflation was somewhat higher in May than in the previous three months, seasonally adjusted.
Moving forward, we expect that record crop areas, early spring, and overall favourable weather will bring a good harvest of vegetables, grains and other crops. Domestic and global grain prices have been down since the beginning of the year. This contains proinflationary risks for food products.
As regards monthly growth in prices of non-food goods and services, it held close to or below 4% in annual terms in March-May.
Fourth. We factored in that inflation expectations of households and businesses remain elevated against both the inflation target and the minimum levels reached in the opening months of 2018. Inflation expectations show mixed dynamics. Business price expectations continued to decline in April-May. Inflation expectations of households came in at 9.3-9.4% during this period. However, we expect that inflation decline to 4% will bring down inflation expectations of households and businesses.
Analysts’ expectations remain anchored at the inflation target of close to 4%.
Fifth. Monetary conditions are softening. This is driven by changing expectations of domestic and external financial market players. First, this is enabled by revised expectations as to the path of the Bank of Russia key rate; second, by an adjustment in expectations and yields in the external financial market against the background of changes in major central banks’ rhetoric – which I have mentioned. OFZ yields are declining in this environment, enabling a potential reduction in deposit and lending rates. Between April and May, a number of major banks revised downwards their interest rates on several deposit products; interest rates on mortgage loans were also beginning to trend down. Today's decision to cut the key rate alongside the signal we have sent out will work to solidify these trends.
Medium-term outlook. The outcome of OPEC+ negotiations remains uncertain. We look to further concerted actions by deal parties to warrant smooth oil price dynamics over the forecast horizon. Based on their actual movements since the year start, we have upgraded the average annual Urals crude price in our baseline scenario from $60 to $65 per barrel in 2019 and from $55 to $60 per barrel in 2020. We retain our conservative assumptions for 2021 whereby the oil price is expected to reach $55 per barrel.
Key balance of payments figures in the baseline scenario have also been adjusted to oil price movements and the expected dynamics of the global economy. This year’s current account balance is estimated to total $98 billion (approx. 6% of GDP) and drop subsequently to $50 billion (approx. 3% of GDP) in 2021. This is attributed to downward oil price trends and expanding imports as economic growth accelerates.
The private sector's financial account balance in 2019 is set to amount to approx. $50 billion (3% of GDP). Financial transactions of private sector balance already reached $35 billion in the first five months of the year. We expect it to drop substantially in the second half of the year compared to both the past year’s last six months and the first six months of this year. The main reasons behind this outlook are as follows. First, it comes as a reflection of the seasonality which is typical of balance of payments figures. Second, we look to normalisation in the accumulation of foreign assets, which has quickened considerably since the middle of the past year in the context of strengthened external, including geopolitical risks.
Our medium-term economic growth outlook is essentially the same. 1-1.5% GDP growth in the current year is expected to accelerate gradually to 2-3% in 2021. Having said that, our forecast will largely depend on the timeframes and successful implementation of the national projects along with other fiscal policy decisions.
Discussions are currently underway about possible options of spending the liquid part of the National Wealth Fund in excess of the 7% of GDP cap. As we look into such options, it is imperative that we remember the key objective of the fiscal rule, which is to reduce the reliance of the economy, of the real exchange rate and of public finances on a volatile energy price environment so that they all become stabilised in a state equivalent to the oil price cut-off. We have largely delivered on this objective, with the impact of oil price fluctuations on the Russian economy having considerably weakened. Current suggestions are essentially focused on changes to the rule. They could result in either direct or indirect change in the cut-off price, entailing a strengthening of the real ruble exchange rate and undermining competitiveness of our products. Alternatively, the stabilising mechanism of the fiscal rule could be undermined, yet again adding to the vulnerability of the Russian economy to fluctuations in external environment.
More so, the 7% of GDP cap was set a long time ago; yet another review is needed to establish whether this volume of liquid assets is adequate to resist to sharp and lengthy change in external conditions.
As we review these and similar suggestions, we urge to fully consider the benefit and loss balance driven by change in macroeconomic conditions which may be tangible enough.
Approaches to fiscal and structural policies will have a significant impact on both our forecast and estimates of the balance of risks for inflation. This will in turn determine the monetary policy path.
Q&A session for the media
QUESTION (RIA Novosti):
Mrs Nabiullina, the Central Bank has updated its signal today in the press release, indicating a possible further rate cut at one of the upcoming meetings and the probable shift to neutral policy by mid-2020. Earlier, you said that ‘by one of the upcoming meetings’ you mean one of the next three meetings. Could you clarify this, please?
Also, will the Central Bank keep its estimate of the neutral rate at 6–7%, or has it changed? Thank you.
We still believe that it may take place at one of the next three meetings. Our estimate of the neutral rate band remains at 6–7%.
Mrs Nabiullina, the updated medium-term macroeconomic forecast projects an acceleration in household final consumption expenditure in 2021 2-3.5 times the amount as much as 2019. Could you please clarify what will drive such a steep expansion under the baseline scenario? Thank you.
The increase in household final consumption expenditure will not be two- or threefold, it is expected to rise 2.5-3% [in 2021. – Ed.] from 1–1.5% [in 2019. – Ed.]. What you are referring to is the gain rate. The outlook relies on expectations of a certain upturn in real household income. In terms of consumer lending, we have marginally revised our forecast upward to 15–20% for this year [gain in claims on households. – Ed.], and in 2020–2021 our forecast remains almost unchanged at 10–15% [in 2021. – Ed.]. So the key factor is the expectation of higher household income.
We also believe that this year’s consumption growth was to a certain extent restrained by the VAT hike.
Mrs Nabiullina, Russia’s foreign exchange reserves recently have passed the $500 billion threshold. How are you planning to increase reserves going forward? Any changes expected?
Also, why do you project such a drastic surge in capital outflow in 2019 – to $50 billion?
On foreign exchange reserves, I would like to remind you that it was not our target, as many assumed, it was rather a desirable level that would provide a comfortable cushion. Indeed, that is the figure we have at the moment – $500 billion. Again, we initially mentioned $500 billion when we did not even have the fiscal rule in place. Currently, the accumulation of reserves primarily relies on the fiscal rule, and we will continue to do so. To recap, we do not expect any extra revision of the benchmarks.
As for a higher financial account balance [in the private sector. – Ed.] from $35 to $50 billion, the data for the four months indicate that we have achieved $35 billion, partially reflecting higher oil prices which were the source of accelerated accumulation, including in foreign assets. We believe that the accelerated buildup of foreign assets will no longer be a contributing factor, and the remaining months will see slower growth in the financial account balance. Nevertheless, we expect it will add another $15 billion by the end of the year. This is the major revision.
Do you expect a faster slowdown in annual inflation in the summer months on the back of cheaper fruit and vegetables and lower indexation of administered prices? Do you believe that deflation is possible in August-September? What is your assessment of the forecast by the Ministry of Economic Development? It expects that inflation in early 2020 will drop lower than 3.5%.
As for summer inflation, indeed, we usually see pronounced seasonality during these months, and we do not rule out possible deflation in the summer months or in September. Now on utility prices. This year, the increase in utility prices has been implemented in two stages. The first hike took place in January, and on 1 July the rise will be lower than 2.7% in annual terms, adding to disinflationary pressure during the period. We expect a good harvest of crops and vegetables. However, it will also strongly depend on weather conditions.
As for our inflation forecast for the remainder of the year, as I said earlier, we have revised it downwards to 4.2–4.7%. Why? Currently, seasonally adjusted monthly inflation stands at around 4%. The accumulated inflation overshoot above 4% due to the VAT hike and other factors totals 0.4 pp. Subsequently, if the level of inflation pressure remains around our target, it will end up between 4.2 and 4.7% [at the end of 2019. – Ed.].
Any strong one-off disinflationary factors would send inflation could be lower. However, we do not consider it very likely so far. We will continue to monitor incoming data and provide our estimate on any change in inflation at the next meetings.
The financial account shows an upgraded forecast for the inflow into government bonds from $6 to $18 billion. Does it mean that you expect another $12 billion into OFZs from non-residents, and which part may go directly to the new Russian Eurobonds?
Also, some analysts interpret your statement on a possible rate cut at one of the next meetings as a signal of just one rate cut this year. Could we possibly expect two rate cuts by the end of the year?
Indeed, we sent a signal that we may move to the neutral rate by mid-2020. It means there may be one or two rate cuts this year, as long as the developments match our baseline scenario and there are no negative shocks.
As for public sector investments, we have attracted as much as $15 billion by now. We believe it is possible to raise some extra investment, about $3 billion by the end of the year.
Traditionally, monetary policy targets demand and credit in the economy to eventually slow down or accelerate growth in prices. However, we now have a situation where annual inflation is lower that the Central Bank’s initial expectations when you raised the key rate, but retail lending growth is higher than expected. It is a kind of a paradox, would you agree? It is usually assumed that the Central Bank adjusts its key rate to slow down or speed up inflation through demand.
There are many factors that come into play in the case of inflation. Certainly, we also look at the impact of consumer demand on inflation. Expanding consumer lending is supposed to drive consumer demand and inflationary pressure. Yet, we do not see that happening. Retail is growing at a very moderate, or rather subdued, rate. This figure and other data bring us to the conclusion that retail lending plays a large role in maintaining the level of household consumption. It does not facilitate any increase in domestic consumer demand; rather, it helps maintain it around the level that was observed previously. This is why I can say that we do not see any pro-inflationary pressure.
That is to say that the primary role of retail lending – consumer lending – is to offset lower real income.
QUESTION (Pensioner newspaper, Yekaterinburg):
Why do banks follow up on a key rate cut by the Bank of Russia with marginal cuts in interest rates on loans but substantial declines in interest rates on deposits?
It may become more pronounced during an interest rate-cutting cycle. It is true, though: banks do not increase or cut loan or deposit rates immediately, neither do they all do it equally fast. Incidentally, adjustments to loan interest rates are made based on other factors beyond inflation and our key rate. Banks also take into account borrower risks, which could have risen or subsided, alongside non-price lending conditions. The transmission of our key rate into long or short-term loan and deposit interest rates varies.
Also, you have to benchmark it against the preceding period. For instance, last year deposit interest rates started climbing even before we raised the key rate. Thereby, banks responded to growing inflation and inflation-related risks, rather than to a change in the key rate.
This inconsistent pattern will sustain; but generally when we cut the key rate and when inflation-related risks are down, banks will usually reflect it – to a varying extent and with a varying lag – in deposit and loan interest rates.
QUESTION (Rossia 24 TV Channel):
Kommersant newspaper recently ran a report on the increasing number of loans issued to 18-year-olds. Once they turn 18, that is when they come of age, they get a letter from a bank with a credit card. But we all understand that financially they entirely depend on their parents, and it is their parents who will have to pay off their debt. Does the Central Bank see it as a threat or a risk?
Indeed, banks should do more due diligence on the solvency of borrowers in the case of consumer loans. This is exactly why we are introducing such an indicator as the borrower’s debt burden. We are planning to roll it out on 1 October. We published the draft regulatory act the other day to discuss it with banks once again, although it is an issue that have been discussing with them for a long time.
Banks will have to estimate the borrower’s income, potential income and the debt burden that they already have. It will be reflected in the risk ratios for banks. This is the kind of soft regulation that we are bringing in but it should not turn into selective regulation based on age or any other indicators. It is the borrower’s debt burden that matters.
You mentioned the NWF and the 7% of GDP cap. What will be the comfortable level of liquid assets at the NWF so that Russia could start investing its funds without undermining the fiscal rule effect? You might have this figure in mind, but could you share it with us please?
Also, consultations are now underway with Belarus on a single currency as part of the Union State. What is the current status of the talks? What exactly are you planning – switching to the Russian ruble or some new currency? Will you launch the same debate with other members of the Eurasian Economic Union?
First, on 7%. Indeed, we will have to review the cap once again. We will need to revisit it. I think it will also make sense for the Government and the Central Bank to exchange their assessments. But, generally, the issue is not just 7%, it is about changing the mechanism that allows tapping into oil and gas revenue. If we spend all the revenue from higher oil prices in excess of 7% of GDP, it would restore the dependence of our domestic indicators on oil price changes. Once the 7% cap is achieved, any excess would entail higher spending, a change in the real effective exchange rate, etc. Basically, our vulnerability will be back. I think it is the least desirable option.
Some argue that we should spend not the entire revenue in excess of 7% but just a portion of it. In essence, it would be equivalent to raising the cut-off price [of oil under the fiscal rule. – Ed.]. That is, we stabilise the economy and it will no longer depend on oil prices that much, but the level of stabilisation will not be 40+ [US dollars per barrel. – Ed.], which we currently have, but somewhat higher. It might bring about a one-off appreciation of the real exchange rate of the ruble and a certain weakening of our companies’ competitiveness. But in principle, the stabilising effect of the fiscal rule will sustain. So when we discuss investment arrangements, we need to understand what exactly we are talking about, where we are ready to budge, if we are ready at all. The exercise is also important in estimating whether 7% is sufficient for the NWF to [cover. – Ed.] risks, which are different today to those that were identified before the fiscal rule was introduced, including before various foreign economic factors came into play.
There is a third factor, should the investment strategy be defined, that will be important – and that is the efficiency of investments. They must boost the potential rate of economic growth. It would dampen the pro-inflationary impact and we would not have to respond with monetary policy.
Some argue in favour of loans to importers so that they would drive external demand for our products. However, from the macroeconomic perspective, in terms of the inflow of foreign currency, it would be equivalent to spending the funds domestically. This is why we believe the macroeconomic effect on the real effective exchange rate will be roughly the same.
In case the funds are released from the NWF, it would be vital to identify areas where investments would yield maximum effect in terms of boosting the potential growth rate of the economy.
As for talks with Belarus, they are indeed underway, but at a very early stage. The Union State Treaty mentions, among other areas, a possible move to a single currency. Yet again, the talks have just got underway and definitely we are not yet at a stage to roll it out in our relationship with other countries.
One follow-up question on the 7% cap. If I am the Russian government and I come to you for advice on how much higher the cap should be, what would your judgment be – 15, 20, or 50%?
If the Government does turn to us, we will do our calculations. We do not have any final calculations yet and I cannot give any definitive advice.
I have simply pointed out that the cap was taken from the previous regulation, and we need to treat it with a pinch of salt. We have not done that yet, but we will be working on it to calculate what we would consider a comfortable and safe level of the NWF.
Thank you. And a more general question. You had a debate on consumer lending with Minister Oreshkin at SPIEF 2019. Oreshkin called consumer lending a bubble while you said that if people take out loans, it means they are not so well-to-do. Basically, it was not really a debate, you both voiced the same conclusion: Russians are struggling. Household income has been dropping for several years running, the average ticket is shrinking, too, lending is up, as you say, investment projects have not really made a difference, inflation is low, and oil prices are high. Just earlier, you said the financial situation is improving. It may be improving but people are getting poorer. We seem to be in a trap, you can call it structural or whatever, I do not really know the exact term. But can you show us the way out? Thank you.
I made my position clear at SPIEF. I think barriers to economic growth should be found in areas other than the financial sector. Experts, government officials, and, most importantly, the business community have outlined the issues that hold back economic growth. Interestingly, credit availability is usually ranked sixth or seventh, depending on the poll, [among Russian businesses’ concerns. – Ed.], it does not even rank in the top three issues, which include predictable economic growth, the investment climate and everything that is related with the investment climate.
This is why when proposing policies to boost economic growth we must primarily focus on removing those barriers that both economic entities and we see as barriers. From this perspective, the full range of structural policies to improve the investment climate has been designed to accelerate economic growth. This is the ultimate goal of the national projects.
Again, here are my concerns. What we saw this year is that national projects are time-intensive. These are complex undertakings and it is clear that they would take a lot of time. First, it takes a lot of time to implement them, and then you have to wait for any positive effect. Structural reforms will ultimately pay off, but it takes time to see tangible changes. This is why we need to focus on what is really needed for sustainable long-term growth. If the projects do not bring immediate gains, we will be tempted either to ramp up investment or cut the monetary policy rate. It might accelerate economic growth in the short term.
However, I am deeply convinced that it would not increase economic potential or provide sustainable economic growth. This is the perspective that we use when we define the role of monetary policy. This issue is getting increasing attention. Our vision is that the Central Bank should spur economic growth. It requires low and steady inflation and predictable rules. We believe this is our contribution to increasing investor appeal. However, it is not enough. Stability alone cannot drive economic or real household income growth.
As for consumer lending, again, there are no bubbles there. Not a single indicator reveals any bubble. And changes in the retail trade turnover are further evidence. But bubbles may emerge – consumer lending and mortgage lending are the areas where bubbles may grow very fast. This is why we are taking macroprudential measures to avoid any bubbles going forward that would pose risks to financial stability. There are none [bubbles. – Ed.] right now. And our policies seek to prevent any bubbles in the future.
QUESTION (74.ru news agency, Chelyabinsk):
Which level of inflation do you think would facilitate economic growth or – better still – an economic breakthrough in Russia?
If we are to see sustainable and robust economic growth (currently, the rate is quite low), we need steadily low inflation. Low and steady. This is an extremely critical component because it is steadily low inflation that makes loans affordable for businesses, and people would not be afraid that their income or wages would lose in value due to inflation. It broadens the planning horizon, increases [predictability. – Ed.], and expands economic growth.
Apropos, an inflation level higher than 4% is quite unstable. The higher inflation, the less stable it is. Many countries keep their target at a lower level, with 2% rather than 4% in developed countries. But based on our calculations and estimates, 4% is the appropriate target for the Russian economy at a time of structural change and structural price adjustment. Our mission is to build confidence in a stable price environment that will not change and will facilitate economic growth.
Banks have pointed out that the Central Bank’s policies in consumer lending have led to a gradual extension of maturity, and that carries certain risks. What is your take? Are there indeed any risks? If yes, what measures are needed to reverse the trend?
We do have information that some banks try to circumvent our regulation by extending maturity of what are really short-term consumer loans. We are discussing it internally at the moment – to find a solution to make sure there are no such loopholes going forward.
I have a follow-up question on the NWF. Have you had a meeting with your counterparts from the Government on that? What is the response to your proposal by the Ministry of Finance? Have you escalated the NWF spending issue to the level of the president? Thank you.
No. We have just started our discussions, since the 7% cap of the liquid assets will be reached next year, according to a government estimate. So it makes sense to begin our consultations now. The Ministry of Finance is aware of our cautious attitude to changing the rule since we are convinced that the fiscal rule has been playing a very positive and stabilising role both for the financial system and the economy in general. But investment, and particularly infrastructure investment, are needed, too.
The biggest challenge is to ensure efficient implementation of the projects that have allocated funding and take the decision based on the outcomes. In short, the debate is at an early stage.
There has been a rally in the OFZ market and it is continuing after your signal. Do you think there is a risk of overheating in the market?
We do not see any such risks, but what we have noticed is that the yields are declining and this is reflected in the path of our monetary policy and the monetary policy of the world’s leading central banks. We do not see risks even with a higher share of non-residents. It has edged up in the OFZ market, but has not reached the historical high. Our record level was 34%, and right now it is marginally above 29%.
Why do we not see any risks? Generally, Russia has a low level of public debt. It is one of the key factors that stabilises the entire financial system. The level of public debt is definitely under control. Thank you.
Mrs Nabiullina, everyone has been waiting for the bill on the individual pension capital (IPC). Are you aware of when it can be published and when the scheme would become operational? What is the final decision on setting up the IPC? Thank you.
It is our ambition to put the individual pension capital into practice as soon as possible. Again, a retirement savings plan is a must-have element of decent pension benefits that our future retirees should enjoy. Also, it represents long-term funds for the economy and is a major stabilising factor for the financial system since it serves as our domestic institutional investor in the Russian economy.
But the Bank of Russia is not empowered to initiate legislation, it is up to the government to start the debate, but we are prepared for it. I am not in a position to give you the deadlines for its publication, discussion and implementation. But we hope it will be done.
Indeed, one of the issues that is under discussion is how voluntary or, rather automatic, participation will be. Generally, the framework would always give people a choice. Our proposals have been initially designed to provide alternatives for people at each stage. However, the ultimate configuration is likely to be shaped by the outcome of the public debate, too. I hope to see it happening soon.
We saw a recent discussion on limiting the time for the Central Bank to own the banks under resolution. The Ministry of Finance and the Ministry of Economic Development believe that the ownership time must be limited.
You said multiple times that there is a concrete wall between the supervision department and other units at the Central Bank. But, as a broader question, maybe it is high time for you to dispose of your holdings in financial organisations, for instance, Sberbank and the Moscow Exchange?
As for the banks under resolution, I can confirm once again that we are getting them ready for sale. We have put up the smaller banks for sale and we would be ready to do it again, but we would first need to pass legislative amendments and get annual financial reports. PJSC FC Otkritie is expected to go on sale in 2021.
The legislative limit of the ownership time is not needed and could be even harmful. Anyway, if it has to be set, the limit should apply to state ownership of any non-strategic assets, not just banks. Just for the record, the role of the state is extensive in other sectors, not just the banking one.
I think, setting any deadlines in law is harmful since investors would be certain that the owner would have to sell the asset regardless of economic conditions at the moment. Downward pressure on the asset price will grow. Eventually, we would have to sell it with a major discount.
Generally, any sale has to be made under favourable economic conditions. We understand that you can always cite a poor environment as an excuse for not selling it. We do not intend to wait for the best possible conditions but we do not want to be forced to sell at a time of a major downturn – no owner in their right mind would do it. This is why there should be some flexibility here.
As for the wall, indeed, we have many functions that could potentially entail a conflict of interest. It is natural as we are a mega-regulator. We are well aware of it, this is why we put up walls and checks between our different functions. For instance, the board of directors at the financial companies that we own do not have any representatives of the supervision department.
In our monetary policy we do not take into account supervision data. The best proof is that the Bank of Russia also lost funds at the banks whose licences were revoked. So it is really a wall in this respect.
We will continue to pursue the policy. We are fully aware that we have to resolve the conflict of interest so that the market would have more confidence in our supervisory policy. It is extremely important and it is always on our radar. Thank you.