The Government and the Bank of Russia are unanimous that funds allocated for additional capitalisation of banks should be spent on expanding lending to real sectors of the economy rather than patching up the loopholes in banks’ capital (they are not aimed at supporting owners). To our regret, interest rates on bank loans have grown and accessibility of loans for the economy slumped. However, we can see that in recent months banks have followed the reduction of the key rate and above all the mitigation of inflation risks and gradually cut their loan rates. Furthermore, difficulties in the economy and finance are not a reason for curtailing the policy of banking sector resolution. Besides, we consider it necessary to enhance banking supervision. In 2014, banking licences were revoked from 86 credit institutions and earlier in 2015 from another 30, mostly due to the violation of banking laws, suspicious transactions, accumulated financial problems, and non-disclosure of real financial standing through misreporting. The supervisory objective for the near future is to identify banks’ problems as soon as possible. This will allow us to protect the stability of both the financial system and banks’ creditors. As for suspicious transactions, the number of banks servicing the shadow economy is constantly declining: according to our estimates, currently there are about 20 of them, and when we started their number approximated 150. The volume of overseas money diversion and cash withdrawal through the banking system has declined.

We make use of the powers conferred on us under the amendments to the law approved by the parliament. I would like to express special gratitude to you for that. We progressively stamp out suspicious transactions from the banking sector. Our current objective is to introduce end-to-end supervision over both credit institutions and non-bank  BIS central bankers’ speeches  3  organisations through implementing our functions of a megaregulator in order to prevent the spillover of suspicious transactions from the banking to the non-banking sector. The last year was important as the first full year in our capacity of megaregulator. We completed the transition period nine months earlier than expected. Along with internal restructuring at the Bank of Russia, we kept working on legislative initiatives. We continue developing financial market infrastructure by creating new and improving existing instruments. High-quality improvements in the system of financial market regulation and supervision are impossible without legislative amendments. Non-governmental pension funds had to be incorporated and join the guarantee system. We inspected non-governmental pension funds before their accession to the guarantee system. As a result, 26 funds joined the system. The supervision obliged many funds to improve the quality of their assets and to make the ownership transparent, so that the guarantee system incorporated only resilient funds capable of ensuring safety of pension savings. We will further monitor and supervise these funds very closely. Some words about insurance. We applied new laws on compulsory motor third party liability insurance (OSAGO) and raised the tariffs.