G20 financial regulation reforms insufficient to restore stability - Siluanov
MOSCOW. Feb 27 (Interfax) - The financial regulation reforms suggested and being drafted by the G20 and Financial Stability Board (FSB) will not be enough to restore stability in the global financial sector, Russian Finance Minister Anton Siluanov said.
"The proposed reform is certainly a necessary condition for the restoration of systemic stability. But are these conditions enough? It would not appear so," Siluanov said at a conference organized in the context of the G20 Institute of International Finance meeting.
Siluanov said there was "weakness in regulation and oversight of financial institutions, the pro-cyclicality of existing measures."
The situation in the eurozone is an example of this. "The sovereign debt crisis in eurozone countries and its close interdependence between public finances, the banking sector and financial traders poses a serious threat to financial stability," Siluanov said.
He also said that "informal systems of instability" are present in the Russian economy also. In 2008-2009, in order to avoid a banking crisis, Russia needed to make substantial financial injections into the system for managing the state budget and into the Bank of Russia."
But he said "the efficiency of this sort of bailout is still subject to arguments and doubt."
Siluanov said Russia was implementing elements of Basel II and was preparing to introduce Basel III innovations. "Although 90% of Russian banks already meet [Basel III] requirements, and capital adequacy in the Russian banking system averages at 15%-16%, which is a very high showing," he said.
Russia also plans to start drafting "framework approaches for banks to carry out their own financial rejuvenation and insolvency regulation," Siluanov said.
"During the initial stage this will be carried out in the form of recommendations, and in the second stage in the form of Central Bank regulatory acts and the relevant amendments to legislation. We plan to endow the Bank of Russia with the power to apply as broad a range of enforcement actions as possible, including the creation of bridge banks, introduction of various regimes and moratoriums on payments to creditors, restricting payments to bank managements and other measures," he said.
The Russian authorities plan to broaden the sphere of prudential oversight by regulating the activity of pawnbrokers and of legal entities that provide alternative financial services and accumulate the funds of ordinary people, he said.