Some banks have been accused of significant fraud, including international fraud, but central bank officials have done nothing about it. Ironically, the central bank also wants to control the developing capital markets, and it's sabotaging the proposal of Anatoly Chubais, the first deputy prime minister, to establish investment banks separate from the commercial banks. The latter also are opposed to the idea of separate investment banks and are setting up subsidiaries to circumvent reserve requirements for investments which banks make in securities. First, a comprehensive body of law must be developed because now there is no overall legal system on which society can rely. Currently there are only fragmentary laws that contradict each other.
Banking regulations are equally fragmented and contradictory.
Parliament, the tax authority, the finance ministry, and the government all set different requirements. What is needed is a unified banking law and regulations that would address all aspects of banking, such as accounting standards, taxation of banks and their clients, etc. In the end, however, reliable enforcement of the law holds the key, but this will take time. In my view, monetary policy will continue to be cyclical for several reasons. First, there are many enterprises that are losing money because they are not producing goods people want to buy.