are confident that the arrival of the floating rate regime has in many ways helped the economy adjust to external shocks more quickly than it did in 2008 – 2009. this is also suggested by the depth of recession. it was the floating regime arrangement that enabled the real sector of the economy, together with the financial sector, to adjust to a drastically different environment. this really is an inbuilt stabiliser, and we see that it does work. the disadvantage of this approach at the time of its rollout was that this policy decision coincided with a drop in the price of oil, triggering a surge in inflation, which in turn necessitated a rise in the rates. but you will recall that we saw a comparable drop in the price of oil in early 2016 which had almost no impact on inflation. these are signs of an economy which is becoming accustomed to a floating rate and how it works. in my opinion this is where the floating exchange rate demonstrated its positive role as an economic adjustment enabler. we are indeed scared of floating schemes in the economy, explained by the many decades of a fixed exchange rate which changes only during a crisis, such as a devaluation crisis, and aside from which remains permanent for a period of time. admittedly, this volatility of the exchange rate is a concern. but i will remind you that when the exchange rate was permanent, our interest rates were very volatile, as were other prerequisites to business. therefore, it will take some time for the economy to adjust to some volatility. this is number two. 8 / 14 bis central bankers'speeches third. volatility receded drastically following the introduction of the floating exchange rate. it was very high according to various measures : both realised volatility and implied volatility, monthly and three - monthly. it is now down to levels seen in other emerging markets, possibly even lower. moreover, it is substantially lower than oil volatility. it was assumed previously that as long as oil is overly volatile, the ruble remains equally as volatile. yet the volatility of the ruble is lower than that of oil. it will take a further diversification of the economy to enable basic conditions for bringing down volatility. the current developments call for further promotion of forex hedging instruments. we see demand emerging for these instruments, which is why we welcome the initiative of the government ’ s ministry for the economy for the establishment of a dedicated facility to support

april – december ), which is 22 % less than the payments made in the same period of the previous year ( us $ 21. 1 billion ). now, given the recovery in economic activity in the world and in russia, as well as the increase in attractiveness of russian borrowers, there is the potential risk that these borrowers will accumulate excess foreign currency debt. this risk is emphasised by the fact that far from all of the exporter companies can claim to have a comprehensive natural hedge against currency risks. in some cases companies raise foreign currency debt which is not fully covered by inflows from export activities. in 2008 – 09 and 2014 – 15, the bank of russia ’ s assets were used to refinance external loans which had been raised by commodity companies. it is therefore essential to keep monitoring the risks of excessive external debt accumulation, for which purpose the bank of russia has instated monitoring of companies ’ foreign currency debt levels. among the many tools for macroprudential risk management are the measures taken by the bank of russia towards the deforexation of the economy. given that in russia, phases of the financial cycle largely correlate with phases of the commodity cycle, we think these measures need to be countercyclical – allowing banks to accumulate capital during periods of credit expansion and then use it as a cushion in periods of credit crunch. this approach will smooth out the sharpness of fluctuations in the financial cycle and reduce financial stability risks. 4 ) on credit risk in the banking sector first of all, it must be noted that for the most part credit risks in the corporate segment did in fact come to pass. if we look at the statistics, over the past six months the share of overdue loans has remained virtually unchanged, coming to 6. 7 % on 1 march 2017. the share of bad loans in banking portfolios also remains unchanged ( sitting at 8. 7 %, excluding rehabilitated banks, in contrast to the previous level of 8. 6 % ). the largest share of bad debt is to be found in the construction sector ( 27. 3 % ), real estate transactions ( 13. 5 % ) and wholesale and retail trade ( 15. 1 % ). to a large extent, the realisation of risks in these sectors was caused by the reckless actions of not only borrowers, but also banks providing foreign currency loans to borrowers who do not have foreign currency earnings. the second point i would like to address is how