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Legal Status and Functions

Article 75 of the Constitution of the Russian Federation establishes the special legal status of the Central Bank of the Russian Federation, gives it the exclusive right to issue currency (Part 1) and to protect the ruble and ensure its stability, which is its main function (Part 2). The status, goals, functions and powers of the Bank of Russia are defined by Federal Law No. 86-FZ, dated 10 July 2002, ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and by other federal laws.

According to Article 3 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, the goals of the Bank of Russia are: to protect the ruble and ensure its stability; to develop and strengthen the banking system of the Russian Federation, to ensure stability of and develop the national payment system, and to develop the financial market  of the Russian Federation and ensure its stability.

A key element of the legal status of the Bank of Russia is its independence, which implies, above all, that the Bank of Russia is a special public legal institution that has the exclusive right to issue currency and organise its circulation. The Bank of Russia is not a body of state power, but its powers are, in effect, the functions of a body of state power, because their implementation implies the use of state enforcement The Bank of Russia performs the functions and exercises the powers stipulated by the Constitution of the Russian Federation and the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ independently from the federal bodies of state power, regional authorities and local governments. Its independent status is reflected in Article 75 of the Constitution of the Russian Federation and Article 1 and Article 2 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.

The legislative powers of the Bank of Russia imply its exclusive right to issue regulations binding on federal bodies of state power, regional authorities, local governments and all legal entities and individuals on matters placed under its remit by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and by other federal laws. According to Article 104 of the Constitution of the Russian Federation, the Bank of Russia does not have the power to initiate legislation, but it is involved in the legislative process not only by virtue of issuing its own regulations, but also owing to the fact that drafts of federal laws or the statutory acts of federal bodies of executive power concerning the performance by the Bank of Russia of its functions must be submitted to the Bank of Russia for consideration and approval.

The Bank of Russia is a legal entity. Its authorised capital and other property are federal property. Nevertheless, the Bank of Russia has both proprietary and financial independence. It exercises its powers to own, use and manage its property, including its international reserves, in compliance with the purposes and according to the procedure established by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’. Bank of Russia property may not be seized or encumbered without its consent, unless federal law stipulates otherwise. The financial independence of the Bank of Russia implies that it covers its expenses from its own income. The Bank of Russia may defend its interests in court, including in international courts, the courts of foreign states and courts of arbitration.

The state is not liable for the obligations of the Bank of Russia, and similarly, the Bank of Russia is not liable for the obligations of the state, unless they have assumed such obligations or unless federal laws stipulate otherwise. The Bank of Russia is not liable for the obligations of credit institutions and non-credit financial institutions, while credit institutions and non-credit financial institutions are not liable for the obligations of the Bank of Russia, except for cases in which the Bank of Russia or credit institutions and non-credit financial institutions assume such obligations.

The Bank of Russia is accountable to the State Duma of the Federal Assembly of the Russian Federation (hereinafter referred to as the State Duma), which appoints and dismisses the Governor of the Bank of Russia (at the proposal of the President of the Russian Federation) and the members of the Bank of Russia Board of Directors (at the proposal of the Governor of the Bank of Russia, with the agreement of the President of the Russian Federation), sends and recalls its representatives on the National Financial Board within its quota and examines the guidelines for the single state monetary policy and the annual reports of the Bank of Russia and takes decisions on them. At the proposal of the National Financial Board, the State Duma may take the decision to have the Audit Chamber of the Russian Federation audit the financial and economic activities of the Bank of Russia or its divisions and establishments. In addition, the State Duma holds parliamentary hearings on the activities of the Bank of Russia, with the participation of representatives of the Bank of Russia, and hears the reports of the Governor of the Bank of Russia on Bank of Russia activities in the course of presenting the annual reports and guidelines for the single state monetary policy.

Functions of the Bank of Russia

The Bank of Russia performs its functions in compliance with the Constitution of the Russian Federation, the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and other federal laws. According to Article 75 of the Constitution of the Russian Federation, the principal function of the Bank of Russia is to protect the ruble and ensure its stability; the Bank of Russia is the sole issuer of currency. Pursuant to Article 4 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, the Bank of Russia performs the following functions:

  • in collaboration with the Government of the Russian Federation, it elaborates and pursues a single state monetary policy;
  • in collaboration with the Government of the Russian Federation, it elaborates and pursues a policy of developing and ensuring the stable functioning of the financial market of the Russian Federation;
  • it is the sole issuer of cash money and organiser of cash turnover;
  • it approves the graphic representation of the ruble as the currency sign;
  • it is the last-resort creditor for credit institutions, and it organises the system to refinance them;
  • it sets the rules to effect settlements in the Russian Federation;
  • it exercises supervision and oversight function over the national payment system;
  • it sets the rules to conduct banking operations;
  • it manages the budget accounts of all levels of the budget system of the Russian Federation, unless federal laws stipulate otherwise, by effecting settlements on behalf of the authorised bodies of executive power and state extra-budgetary government funds which entrusted with the task of organising and performing the execution of the budgets;
  • it efficiently manages the international reserves of the Bank of Russia;
  • it adopts decisions on the state registration of credit institutions, it issues banking licences to credit institutions, suspends and revokes them;
  • it adopts decisions on the state registration of non-governmental pension funds;
  • it exercises supervision over the activities of credit institutions and banking groups;
  • it exercises regulation, control and supervision over the activities of non-credit financial institutions in compliance with federal laws;
  • it registers equity securities issues, securities prospectuses and reports on the results of the issuance of equity securities;
  • it exercises control and supervision over the observance by issuers of the requirements of Russian Federation legislation on joint-stock companies and securities;
  • it exercises regulation, control and supervision in the area of corporate relations in joint-stock companies;
  • it conducts, on its own behalf or on behalf of the Government of the Russian Federation, all kinds of banking operations and other transactions necessary for the fulfilment by the Bank of Russia of its functions;
  • it organises and exercises foreign exchange regulation and foreign exchange control pursuant to the legislation of the Russian Federation;
  • it sets the procedure for effecting settlements with international organisations, foreign states, legal entities and individuals;
  • it approves sectoral accounting standards for credit institutions, the Bank of Russia and non-credit financial institutions, a chart of accounts for the accounting of credit institutions and the procedure for its application, a chart of accounts for the Bank of Russia and the procedure for its application;
  • it approves a chart of accounts for the accounting of non-credit financial institutions and the procedure for its application;
  • it sets and publishes the official exchange rates of foreign currencies against the ruble;
  • it takes part in making a forecast of the Russian Federation balance of payments;
  • it takes part in the development of a methodology of a compilation of the Russian Federation financial account in the system of national accounts and organises the compilation of the Russian Federation financial account;
  • it compiles the balance of payments of the Russian Federation, international investment position of the Russian Federation, statistical data on external trade of the Russian Federation in services, external debt of the Russian Federation, international reserves of the Russian Federation, direct investment in the Russian Federation and direct investment of the Russian Federation abroad;
  • in order to compile the balance of payments of the Russian Federation, international investment position of the Russian Federation, statistical data on external trade of the Russian Federation in services, external debt of the Russian Federation, international reserves of the Russian Federation, direct investment in the Russian Federation and direct investment of the Russian Federation abroad it develops on its own and approves a statistical methodology, a list of respondents, the procedure and forms for them to provide primary statistical data, including the forms of federal statistical observation;
  • it analyses and forecasts the state of the Russian Federation and publishes the corresponding materials and statistical data;
  • it effects Bank of Russia payments on household deposits with bankrupt banks not covered by the mandatory deposit insurance system in the cases stipulated and according to the procedure established by the federal law;
  • it is the depository of the IMF ruble-denominated funds and it conducts operations and transactions stipulated by the IMF Articles of Agreement and the agreements concluded with the IMF;
  • it exercises control over the observance of the requirements of Russian Federation legislation on countering the illegal use of insider information and market manipulation;
  • it protects the rights and legitimate interests of shareholders and investors on financial markets, insurance policyholders, insured persons and beneficiaries acknowledged as such pursuant to insurance legislation, and also insured persons under compulsory pension insurance, non-governmental pension fund depositors and participants under non-governmental pension provision schemes;
  • it organises provision of the services to transmit electronic messages on financial operations;
  • it fulfils other functions in compliance with federal laws.
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Last updated on: 22/04/2020