20 Sep 2023 18:47

Finance Ministry preparing currency control measures to limit capital flight via friendly countries, CBR is against it

MOSCOW. Sept 20 (Interfax) - The Russian authorities are considering introducing a number of currency control measures to limit the outflow of capital through friendly countries, Deputy Finance Minister Alexey Moiseev said.

"We introduced some fairly serious currency control measures at the beginning of 2022, which were then gradually relaxed during the summer of 2022, when the ruble strengthened. Currently, a number of measures have been developed and are being considered which are aimed at restoring a number of currency control measures. I would not like to say what they are yet, since the measures are still being discussed, and it is not clear yet which of them will ultimately be implemented, or which would be allowed on a temporary basis. It is clear that in the long term the ruble exchange rate depends on the macroeconomic factors that Alexei Zabotkin [deputy chairman of the CBR] discussed. However, currency control is able to restrain temporary fluctuations," he said at an extended meeting of the State Duma Committee on Financial Markets.

"Accordingly, these measures are aimed (...) primarily at the outflow of capital, which is now going through friendly countries. Unfortunately, in a situation where the outflow through unfriendly countries in unfriendly currencies is a significantly difficult challenge, the outflow of capital through friendly countries and in rubles, no less - we have been hostage somewhat to our own policy of promoting the use of the ruble in international payments - leads to the fact that those who are engaged not in settlements, but specifically in the withdrawal of capital, take advantage of this preferential regime for working with friendly countries in rubles," the Deputy Minister said.

The Ministry of Finance has prepared a number of proposals on this matter, and they are now being discussed. "I hope that soon we will be able to tell the general public about the decisions that have been made, whether the measures are introduced or not," Moiseev noted.

Deputy Central Bank Chairman Alexei Zabotkin once again noted that the Bank of Russia is against the introduction of new restrictions. "In general, we do not support strengthening restrictions on the movement of capital. We believe that those restrictions that remain are preserved solely in the logic of symmetry of actions as per the restrictions imposed on us [by other countries] as part of the sanctions," he said.