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Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting 12 February 2021

12 February 2021

Today, we have decided to keep the key rate at 4.25% per annum.

The economy is bouncing back rather steadily. I would like to remind you that at our previous meeting we expected economic revival to pause at the end of 2020. However, GDP statistics and high-frequency indicators evidence that this did not happen. Moreover, inflation also exceeds our expectations.

I will further on dwell on the factors, which we were taking into account when making our decision today.

I will start out with the situation in the economy. It has turned out to be better than we expected, and there is a range of reasons for this. First, the restrictions in autumn and winter were not as tough as in spring. Second, both households and businesses were better prepared for the resurgence of coronavirus cases and adjusted faster. Credit activity did not decline, and consumer demand remained unchanged, including owing to a rise in online purchases. Third, external demand for Russian exports also turned out to be higher than our expectations.

We assume that demand in the economy will be recovering steadily further on, promoted by lending expansion amid accommodative monetary policy, mass vaccination, and an improvement in household and business sentiment.

Over the acute phase of the crisis, budget spending considerably supported the real sector. The effect of stimulus measures is expected to continue in the first half of the year as well. Further on, the scheduled fiscal policy normalisation will reduce the extent of this influence. Nonetheless, the budget will remain expansionary as compared to the long-term parameters provided for by the fiscal rule.

In these conditions, economic growth will continue owing to a further revival of both domestic and external demand. The recovery of domestic demand will be driven by the cancellation of restrictions as the epidemic situation improves, especially in the service sector. External demand will be boosted by a rebound in the global economy. Disinflationary demand-side pressure will thus be decreasing overall.

Given the current positive trends, we keep unchanged our forecast of GDP growth at 3–4% for 2021. Furthermore, the economy may reach its pre-pandemic levels already by late 2021, and not by mid-2022, as we assumed earlier. This will become possible primarily as a result of a less significant decline in 2020.

The second factor is inflation. Annual inflation sped up to 5.2% in January, exceeding the Bank of Russia’s target. This elevated inflation rate largely resulted from the pass-through of the ruble weakening and price growth in global commodity markets. According to our estimates, the contribution of the pass-through of the exchange rate movements to annual inflation approximated one percentage point. The contribution of high prices in food markets was slightly lower yet substantial. Given increased inflation expectations and supply-side restrictions, these factors may have a longer-lasting effect on prices.

The pass-through of last year’s ruble depreciation to prices still continues, although it is waning. Recently, prices could be affected not only by ruble exchange rate fluctuations in 2020 H2, but also its weakening in spring, when enterprises were unable to revise their prices immediately due to a slump in demand. Eventually, the combination of the two episodes of the ruble depreciation may be a reason why inflation expectations will stay elevated for a longer period.

Upward pressure on domestic prices persists due to the situation in global commodity markets, first and foremost in food markets. Food prices have risen because of reduced inventories and unfavourable weather conditions. Moreover, the growth of prices for cereals increases costs in meat product manufacturing and is not only a proinflationary factor in itself, but it may also entail secondary effects. It is worth noting that the new mechanism of export duties in grain markets will smooth out the influence of global price fluctuations on domestic prices.

Finally, inflation is still affected by a group of factors associated with the epidemic situation. It includes staff shortages in a number of industries, increased costs incurred by companies to comply with sanitary and epidemiological rules, and persistent temporary delays in supplies due to disruptions in logistics chains. These are supply-side factors putting upward pressure on inflation.

Given the nature of these processes, we estimate that annual inflation will pass its peak in February—March, after which it will be going down incrementally. This will become possible as the impact of the above proinflationary factors is gradually exhausted. Beginning from March, the statistical base effect will also play a significant role in the decrease in annual inflation. Taking into account the monetary policy pursued, we forecast that prices will grow by 3.7%—4.2% over the year.

The third factor we were taking into account when making our today’s decision is that monetary conditions remain accommodative. While nominal interest rates on loans and deposits changed only slightly, real price conditions were eased. Banks also continued to ease non-price lending conditions in a range of segments. Yields on federal government bonds increased somewhat amid the growth of long-term interest rates in global financial markets.

Owing to the monetary policy pursued and the Government’s anti-crisis support measures, the increase in the banking system’s claims on companies accelerated to 10.2% last year, which is more than in 2019. The growth rate of claims on households equalled 12.9%. The economy and borrowers obtained the funds they needed to more smoothly overcome the acute phase of the crisis and resume development.

In 2021, monetary conditions will remain accommodative, further promoting lending expansion, despite the expected gradual termination of preferential programmes. The banking system’s claims on companies are forecast to increase by 7–11% this year, and those on households — by 14–18%, largely as a result of the accelerated expansion of mortgage lending.

As regards fluctuations in banking sector liquidity observed in recent months, they had no impact on monetary conditions. As before, the Bank of Russia preserved money market rates close to the key rate. This became possible owing to the streamlined operational procedure which is efficient amid both a deficit and a surplus of liquidity.

Today, we have published the Bank of Russia’s updated baseline forecast. It relies on the following assumptions:

First of all, external conditions have become more promising. The global economy is expected to grow faster owing to mass vaccination and additional fiscal stimuli in advanced economies. This will strengthen external demand for Russian exports. Therefore, we have increased our forecast of oil prices from 45 to 50 US dollars per barrel for 2021 and 2022. Nonetheless, our forecast remains conservative given the high uncertainty about a potential further spread of the pandemic. According to our estimates, a faster recovery of the demand for oil may translate to a greater extent into a rise in oil output rather than oil prices.

As regards the 2022–2023 horizon, our forecast remains unchanged. The economy will expand by 2.5–3.5% in 2022 and by 2–3% in 2023. Given the monetary policy pursued, inflation will return to the target at the end of 2021 and stay close to 4% further on.

I will now speak on possible risks to the forecast. Disinflationary risks do not prevail any longer in 2021. Moreover, this is generally a balance between proinflationary and disinflationary risks over the forecast horizon.

Proinflationary risks include, first and foremost, a possible rise in prices in global commodity markets. Second, the epidemic situation remains one of the least predictable factors. Its potential worsening will be the reason why companies’ costs will stay high, with goods transportation problems and production chain disruptions persisting. Third, inflation expectations may remain elevated for a long period of time. Fourth, it is worth emphasising that economic rebound may be uneven and involve local price spikes in individual segments. For instance, as restrictions are lifted in the service sector hardest hit by the pandemic, an increase in demand amid an insufficient rise in supply may become a temporary proinflationary factor. The scale and duration of its impact will depend on a new balance between demand and supply, households’ behaviour, changes in consumer preferences, and the pace of the cancellation of restrictions on foreign travels. Fifth, we still take into account persistent geopolitical risks as they may affect yield trends and inflation and exchange rate expectations.

The second group of risks include disinflationary factors.  First of all, the fiscal policy normalisation may have a more significant influence on final demand and, accordingly, price movements. Second, the uncertainty regarding future consumer behaviour remains. During the quarantine and long self-isolation period, a lot of people abandoned some services, formed new consumption preferences, and changed their mode of life. We do not know whether they will become steady and how they will be influencing price trends. Third, after the boundaries are reopened, it is natural to expect that the demand will shift towards outbound tourism services. As labour migrant flows and logistics chains restore, this will become a disinflationary factor. Finally, as the restrictions are eased, companies will be able to reduce their costs for the sanitation of their premises and the anti-pandemic protection of their staff and customers, which will ease pressures on businesses’ costs.

In conclusion, I would like to comment on monetary policy prospects. The accommodative monetary policy and the Government’s package of anti-crisis measures have been promoting economic revival after the acute phase of the crisis. According to our estimates, we consider that the potential for monetary policy easing has been exhausted. Its further easing could additionally increase proinflationary risks. Nonetheless, monetary policy will remain accommodative on average throughout 2021, supporting the recovery of the Russian economy. The baseline scenario provides for a gradual return to neutral monetary policy. We will assess the timeline and pace for this return taking into account our goal to maintain inflation at our target.

Q&A for the Media

QUESTION from Reuters:

It appears that the policy softening cycle was over last July. What are the chances of beginning a transfer to neutral policy as early as this year?


True, we believe that the softening cycle has come to an end, based on our baseline scenario. We will certainly continue to monitor how things play out. As you may remember, there are four scenarios in our Monetary Policy Guidelines. Moving forward, given the current uncertainty, we will be making our plans more specific. Nevertheless, the softening cycle is indeed over in our baseline scenario, and we are going to discuss the timeline and paces of the transition to neutral policy as the situation develops.

What is this transition going to be like? Just as I have said, this will depend on the situation. It would be premature to give a timeframe at this point.

QUESTION from RIA Novosti:

The Bank of Russia makes it clear in the press release that it expects inflation to peak between February and March. Do you have any expectations for food inflation to accelerate again once the price stabilisation agreement for sunflower and sugar prices has been withdrawn in April?


Indeed, we expect annual inflation to peak in February-March. From a monthly perspective, it is even likely to occur in February, but based on weekly changes in annual inflation, it is likely to come in the first two weeks of March. Plus, the past year’s base effect is going to be visible. Let me remind you, the relatively sharp upturn in prices emerged in the second two weeks of March last year: this is certain to affect annual inflation. Our estimate for it is about 5.5%. It is set to start declining thereafter.

As regards the sunflower and sugar price agreement, we foresee no major implications of it cancellation on overall inflation data. Moreover, we foresee arrangements for an even exit [from the price freeze] and expect no price spike.


My question follows up on the subject of inflation. You have specified proinflationary factors, which include labour shortages and corporate costs relating to compliance. My question is, may these factors really have a substantial impact? What are the chances of them preventing you from delivering on the 4% target next year?


The factor is indeed in place. As the pandemic situation improves and restrictions are lifted, the impact of this factor is set to weaken, we believe. Our inflation forecast takes into account multiple factors. We believe that we are in a position to return inflation to 4% in the face of any factor — that is, in a position to return it to target over a medium-term horizon.

As for this year, our forecast for year-end inflation is close to 4%, based on interval estimation. All our model simulations show that we will deliver on the 4% target next year thanks to the current monetary policy stance.

Should any factors prove more impactful, monetary policy adjustments may be needed, and we stand ready to make them.

QUESTION from Interfax:

You have previously spoken of your intention to publish the key rate path forecast early in 2021. Are you ready to unveil the format for this path to be published? And when exactly does this publication start?


We intend to begin publishing the key rate path forecast in April, following from the next policy meeting decisions. It is true: this forecast will include the Board’s view of the forecast key rate path.

Importantly, this is not going to be a dotted forecast path. The path is going to account for the whole range of model simulation and scenario conditions assumed when the Board discussed this subject.

QUESTION from Kommersant:

Which sectors of the economy are expected, in the Bank of Russia’s view, to post output close to capacity or above in 2021?


There is indeed some unevenness both in the way the economic recovery is evolving and in the progress towards full capacity. The recovery is slower in the services sector, constrained by the restrictions in place, and the sector has a long way to go to reach its potential. Yet this is not to say that output below capacity in some sectors comes without price pressures. Price pressure tends to emerge on the back of faster recovering demand when supply lags behind. This is one of the issues we are focused on.

Still, there are a number of sectors operating at capacity and even slightly above. These are the construction sector in some regions, production of construction materials, domestic tourism — also in several regions, we can say, as well as housing construction.

QUESTION from Bloomberg:

You have previously stated that monetary policy will remain soft throughout 2021. Would you confirm this statement, or would you say it is no longer relevant and the baseline scenario assumes another trajectory?


Our view is that the overall baseline scenario provides for monetary policy to remain soft throughout 2021, providing support to economic recovery.

QUESTION from RBC Newspaper:

At which rate of inflation would the Bank of Russia change over to increasing the key rate? What other indicators would the Bank of Russia rely on in making this decision?


Our key rate decision-making is certainly based on current inflation, which is an important component. Yet the more important factor to consider is the inflation forecast and forecast for inflation drivers. As our monetary policy works with a lag, a decision we are about to make is in many ways driving future monetary conditions. So at some points in time, when inflation might be high, but we understand that its rise was caused by short-term, possibly strong, but short-term factors — those that will have a very short-term effect — no monetary policy response is needed.

Therefore, when we make a decision on the key rate, we have a whole set of options: increase or decrease or keep unchanged. And if the inflation forecast stabilises (overall at a mark close to 4%), this is the time to return to neutral monetary policy.

We have also stated this: once we see the economy has come close to its potential with the output gap and inflation stabilising close to 4%, this is the time to return to neutral policy.

QUESTION from Forbes:

I have two questions, please. If remember correctly, you mention in your statement that the Central Bank expects upward price pressure on food to last somewhat longer than expected. Could you specify, in what time does the Central Bank expect a turnaround in food prices, if at all? This is question one.

And the second question is about the Reddit situation. Do we have a kind of precedent here, a risk of self-organisation of a community of investors, which can become systemic? Or do you think it is not to become system-level; and generally, should the regulator somehow respond?


As regards the question about food prices, their changes and implications for inflation — if I have caught the core question correctly.

On the one hand, we saw a rise in food prices in domestic markets, which was in many ways caused by growth of global food prices. And we can see that growth in global food prices is ongoing, which is raising concerns. But here we have the instrument the Government proposed in relation to grain prices. It can, in our opinion, help lower the volatility of domestic prices and to a great extent undercut the effect of a sharp rise in global prices on the domestic market.

All effects are certain to manifest themselves over time. There are long-term effects in addition to short-term ones: they stem from agricultural producers’ motivation for output expansion in the face of a number instruments in place, including this price control framework, to say nothing of restrictive measures. Nevertheless, we think that global food prices are most likely to remain at elevated levels, but the fallout from this growth in global food prices for the Russian domestic market is set to be limited.

On the current state of financial markets and retail investors’ behaviour, we note two factors that have triggered recent developments in the US stock market. One, the positions of the high-risk strategy of hedge funds were big enough. That resulted in volatility. We can see that short positions of these investors totalled up to three quarters of all shares in free circulation. This is factor one.

And the second factor. We were able to see the strength retail investors can show when they are united with a common idea and when they are quick to self-organise, helped by social networks.

As for the first factor, it is not present in our market. Hedge funds are not that active in the domestic market. But what we can see is a lot of retail investors making forays into the stock market. This is where restrictions for non-qualified investors are essential: investors following a certain strategy and holding some financial instruments may be faced with disappointment or loss. We will keep analysing this situation. We are watching it to determine if our regulation is in need of any changes.

QUESTION from NIA Nizhny Novgorod:

In December, price stabilisation agreements were made with producers, which essentially saw a freeze on sugar and sunflower oil prices. These measures will stay in effect through the end of the first quarter. Will the Central Bank recommend an extension of these agreements? Could perhaps any other products become subject to similar agreements?


We could see that these sugar and sunflower oil price agreements had a real downward effect on prices. They truly made a difference as a short-term measure for price stabilisation. Yet our position is that such measures can bring a positive effect only over a short-term horizon. We therefore consider that they should not be extended. If we have to stabilise or lower price volatility, we could use a market mechanism in the fashion of the Government’s grain framework (enabling ‘dampers’). Nor do we think this measure should be applied to other goods. There is no rationale for this at this moment, and free market pricing is essentially the key principle. Otherwise, sustained administrative measures may translate into a drop in production and supply of relevant goods, and perhaps, into inflation in other goods, for instance, substitute products. Our view is then that these agreements should only be for a very short-term period.

QUESTION Rossiya-24 TV channel:

More than once you spoke of an overheated real estate market, in part due to concessional mortgage programmes. How do things stand now? And, should these concessional programmes be scrapped, what implications would that carry in your opinion? For example, could property prices drop?


Let me comment once again on concessional mortgage programmes. First, concessional mortgage lending was a really impactful tool in the acute phase of the crisis and in its aftermath. It helped support the construction industry, among other sectors, and it helped people obtain low-interest loans.

As time went on, however, supply failed to catch up with accelerating and even roaring demand. This pushed prices higher. Our calculations show that the whole effect of improved housing availability and the whole effect of lower interest were eroded by rising housing prices.

Hence the need to gradually roll back this programme — and we reconfirm our position. It may remain available to the few regions where supply of housing is inadequate or consumer demand has yet to recover in the face of restrictions; it could continue as anti-crisis programme to counter the pandemic.

Yet this is not to say there should be no concessional mortgage loans at all. We need to have a number of concessional mortgage lending programmes of a system nature. In my opinion, there should be concessional mortgage support programmes in a number of regions where construction volumes are low because developers are not interested in low-margin projects, or regions where demand concentration is inadequate. And of course, there is a need for some social programmes we have now, programmes targeting individual social groups, for example young families with children. This social group has growth income potential, and is therefore fairly solvent; so I think there should be permanent programmes of this kind.

Now on the question of whether prices will fall once concessional lending has ended. In our opinion, prices are unlikely to fall, but their growth paces would slow — which would be a welcome development. Now on the subject of housing price trends, which is a key item on the Government’s agenda, we need to bring down construction costs, expand the use of new materials and innovations, and reduce the number of approval procedures, which are rather costly. This is a second component in our strategy towards reduction in housing construction costs, intended to enhance the availability of housing as well as available mortgage loans. It is very important to make sure supply works for available housing, as does low interest.

QUESTION from IA Sibirskie Novosti:

My question follows on from the question on cancelling concessional mortgage programmes. In 2020, the Irkutsk Region recorded all-time high growth in property prices. This growth totalled 26%, while Siberia’s average growth was between 8 and 10%. Could we say that the prices have reached their upper limit?

And another question I meant to ask is whether price trends could reverse once concessional mortgage programmes have stopped, but you have already answered it, thank you.


It is true, there is cross-country variation, there are regional specifics. What I have spoken about is country-wide trends. My understanding is, the housing market in the Irkutsk Region fell under the influence of the recent disaster, resulting in loss of a lot of available housing. This certainly spilled over to prices.

It would be difficult for me to try and quantify the factors behind the price growth in the Irkutsk Region: which comes as a result of concessional mortgage programmes and which is the result of the disaster.

But concessional mortgage programmes are primarily intended to improve the availability of housing to people, and the effects they offer should not be undermined by growing prices. This is why all these programmes need to be customised to make sure they help people solve the housing problem. And I guess I have covered the prices question.

QUESTION from Izvestia:

In the run-up to the Board meeting, the IMF came up with advice that the Bank of Russia should disregard the temporary surge in inflation and lower the rate by 0.5 percentage points. Did you consider this advice or did you just take a wait-and-see stance, or can you see no logic in it?  


The subject of a key rate reduction was not on the agenda of today’s Board meeting. More so, if our baseline scenario materialises, we have no further room for monetary policy easing. The IMF proposals were based on a more disinflationary scenario than our baseline one. We also have a disinflationary scenario, and we include it in the Monetary Policy Guidelines. Yet in our view, the proinflationary, rather than the disinflationary, scenario is gaining momentum. This is why our forecast is different from the IMF’s. I realise there are other experts out there whose outlook is different. We are guided by the forecast we build and we make decisions based on our view of the situation and based on our forecast.

QUESTION from Rossiyskaya Gazeta:

What is the Bank of Russia’s view of households’ debt burden? Was it up at the time of the pandemic, and is it on track to grow after? Do you think the quality of mortgage loans is going to deteriorate because of concessional mortgage loans?


As for debt burden indicators, in terms of the debt to income ratio, the debt burden of households went up in 2020. This came on the back of growth in retail loans, thanks to, in the first place, growth in mortgage loans outrunning that of incomes. Incomes also grew but slightly less. It is only natural that the debt burden indicator was up slightly. 

This trend is likely to continue into 2021, with lending to households expected to expand slightly faster than household incomes; this lending is in many ways set to support economic growth. What I would like to highlight is this. Based on our monitoring of these loans, there was no great deterioration in their quality. Banks are now issuing new loans to borrowers with lower burdens. That is, borrowers that already have a high debt burden are getting fewer loans.

If the debt burden indicator continues to grow, on the back of mounting retail loan disbursements, this will be a normal process, a sign of further penetration of retail lending. We however intend to monitor these developments to make sure there are no prerequisites for any system risks. Were this the case, we have all the tools, including macroprudential regulation, to address this. Ratios could be put in place to normalise this process. Current trends here look absolutely normal, in our opinion.

QUESTION (Fomag.ru):

The Russian President recently spoke, on several occasions since the beginning of February, on investor protection. Also, the finance minister spoke out on the subject. Did the fact that the subject escalated to this level somehow influence the Bank of Russia’s efforts in this area?


It was several years ago that we first brought up this subject. We initiated the passing of a law to differentiate between qualified and non-qualified investors and establish reliable protection of non-qualified investors. The law had been discussed at length. Market players were concerned about change in procedures, change in testing, etc. We finally came to a compromise solution, with the intention of launching the protection framework in April 2022. However, the change in conditions, including owing to people looking for higher returns against the background of lower deposit rates, propelled consumer to become a lot more interested in stock market instruments in 2020. Therefore, we currently lack the initial time buffer we would have in a routine behaviour scenario, a scenario of gradually changing consumer behaviour. As things stand, the situation is different.

We first and foremost raised the issue of protection of non-qualified investors as we were concerned about, among other things, numerous instances of unfair sale, the so-called misselling, when complex structured products were sold to people as if they were products with insured risk, as if they were deposits. We then initiated amendments to legislation, and deputies have drafted the relevant law. Our view of this draft is positive and it will hopefully pass in the near future.

While this draft has yet to become a law, we have issued strong recommendations to all banks and non-bank institutions that they forego sales of complex products to non-qualified investors. Admittedly, most financial organisations took a responsible approach towards this recommendation. Many of them cherish their customers’ trust. We hope that the new legislation will also help regulate the issue.

QUESTION from RBC Newspaper:

In the December to January period the Russian banking sector had to operate with a structural liquidity deficit, for the first time in three years. This February saw a drastic change, and at some point the surplus even went beyond 3 trillion rubles. Analysts said these fluctuations were down to the Finance Ministry’s activities: their closure of deposits and OFZ placement. What is the Bank of Russia’s assessment of higher volatility of this indicator and the Finance Ministry’s influence on the situation? Are there any risks for banks? If so, what instruments are available to the Bank of Russia to eliminate these risks?


Liquidity fluctuations were indeed seen last year and early this year. Importantly, a structural liquidity surplus sustained throughout last year. It went down mainly on the back of cash outflows, rather than the Finance Ministry’s action. This is a meaningful component in this liquidity change. Yet, the Finance Ministry’s operations made a strong impact on the situation, at some point we even moved into a structural liquidity surplus. We are now back to a structural liquidity surplus.

Meanwhile, these developments had no impact on monetary conditions, in our view. We just readjusted our operations, alternating repo and deposit operations to set off changes in liquidity. This enabled banks to receive liquidity in our operations when Finance Ministry operations were not available, and then return the funds when the Finance Ministry resumed investment of funds. These liquidity fluctuations do come about. This is why we are retaining long repo auctions for now: they are for banks to feel comfortable and assured that central bank funds are available to them any time.

According to our general outlook for the banking system, the structural liquidity surplus is on track to remain at close to current levels, with possible fluctuations relating to cash flows and Finance Ministry flows.

QUESTION from Reuters:

Was an increase in the key rate on today’s meeting agenda?


Just as I have mentioned, a key rate reduction was not on the agenda. We essentially focused on the unchanged rate scenario and discussed potential paths, timeframe and paces of rate neutralisation. Understandably, more data is needed at this point for more clarity here.

QUESTION from Interfax:

We welcomed the Bank of Russia’s announcement late last year about the future of the banks that are under resolution with the BSCF [Banking Sector Consolidation Fund], in particular Moscow Industrial Bank and Otkritie. Could you give us some updates, especially on status of talks between the Bank of Russia and Promsvyazbank on the transfer of Moscow Industrial Bank’s assets to Promsvyazbank? Has a decision been taken by the regulator, and what are the terms of this transfer?

And on Otkritie, the Central Bank said late December that there were plans to sell part of its shares in 2022, and admitted that the sale of the whole group or its part to a strategic investor was possible. Could you specify which companies within the group were meant?


Let me begin by confirming our strategy and our policy: we are committed to exiting from the capital of banks under resolution. This is a principled stand. Preparations are underway for the sale of Asian-Pacific Bank, and there is investor interest. On Moscow Industrial Bank, we are indeed in talks with Promsvyazbank. It would be premature to unveil any decisions or a sale format. Our discussions on the subject are ongoing.

As regards Otkritie, it is really a matter of choice: selling the whole group or spinning off some of its parts and selling them, possibly to strategic investors given the evident demand for assets of different kinds. What I mean is its pension assets (the non-governmental pension fund) and insurance business in the first place.

We now have investment advisers. One of their tasks is to assess these options, and highlight their advantages and weak points: selling the whole group or selling it in parts, for us to consider. I think that we will hopefully make decisions on the matter between late spring and early summer. Moving forward, these decisions could be conditionally adjusted on the situation, but generally our intention is to start sell selling Otkritie in 2022.

Our plans are conditional on economic conditions, but we have every intention to launch this process. This is why these timeframes are factored in our internal plans and interactions with the investment advisers.

QUESTION from Bloomberg:

My question is about bitcoin. The cryptocurrency reached all-time highs over its recognition by major companies, banks and payment systems. In this connection, is there any change in your attitude to cryptocurrencies? When can we expect the launch of a digital ruble? Will it be able to compete with current cryptocurrencies?


There are no changes whatsoever in my attitude to private cryptocurrencies, including bitcoin. What this rise only shows is the potential volatility of such private cryptocurrencies. To tell the truth, the price of bitcoin does not even impact on its substance. In our view, this is not a currency. Admittedly, there is demand for this asset, yet the risks are the same, and perhaps even higher. This is a very volatile asset: its price may grow and then drop just as fast, history showed that.

Secondly, bitcoin can be used in a lot of questionable transactions. We can see this, too.

As for a digital ruble, this is a totally different subject. The digital ruble consultation paper is now under active discussion. We want to see which model of a digital ruble is preferred. As you know, the consultation paper offers four models, and market players are chiefly inclined towards one them. This will be reflected in a concept following up on the discussions. Our priority is to discuss and reach a clear understanding as to what advantages a digital ruble would bring to both businesses and consumers. There are some evident advantages, even considering all the advances in remote banking services and cashless payments. We can see there is reasonably strong interest in a digital ruble.

Also, we are looking into potential risks. Preliminary assessments enable us to conclude that these risks are limited and could be controlled (the concept will also cover this). We may need to provide for risk reduction, in the models and in the gradual rollout of a digital ruble. So we are finalising digital ruble discussions. Thereafter, we are presenting a concept as planned and will move on.


The Ministry of Industry and Trade has come up with a proposal to review another reduction in interchange fees. Has the regulator’s position changed: do you leave open the possibility of further curbs?


We have really discussed the subject of interchange fees for some time. We introduced some system caps for socially significant types of products; we also enacted fee regulation for the pandemic period. However, we would not like this regulation to become permanent. Certainly, we will be monitoring this situation. If interchange rates grow further, we would be ready to apply regulatory curbs to limit this growth. Yet we can see that current interchange rates are in general driven by banks’ business models; they cover banks’ costs of POS terminals, e.g. their installation etc. That is, they help advance cashless payment methods and make these methods of payment convenient for consumers and businesses. Secondly, some part of interchange fee comes back to consumers as cashback in loyalty schemes.

This is evidenced by what happened when we acted to curb interchange rates: some banks opted out of such loyalty schemes. This is a matter of business model. We think it is essential to provide alternative methods to businesses and consumers, including through the Faster Payments System. In this connection, we are working to promote QR code payments. This service should be user-friendly, and I know colleagues are working to make sure it gains wide acceptance. There should be a variety of options. In my view, competition is key here: it will drive down rates, and will create pressure to keep rates low.

QUESTION from RIA Novosti:

What was the share of cashless payments in 2020? What is the outlook for such payments next year?


Cashless payments accounted for some 70% of all payments in 2020. This is more than we expected early in the year. The pandemic has certainly created further incentives to go cashless. Our regulatory policies, which we have discussed, helped make cashless payments more attractive. We foresee further growth in the share of cashless payments, but this will be single-digit percentage growth, considering the fairly high penetration of cashless payments in our country. So every single percentage point of growth will come at a price, so to speak. And yet, we think that the proportion of cashless payments is set to grow.

Thank you for your time and your questions.