Financial Crime World

Ruble’s Woes: Russia Extends Emergency Measures to Stabilize Currency

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Moscow, January 1, 2016

In a bid to stabilize the battered ruble, Russia has extended its emergency measures to support the currency until April 1, 2016. The measures, which were introduced in December 2014, have been repeatedly extended and modified to address the country’s economic woes.

Ruble Continues to Fluctuate

The latest extension comes as the ruble continues to fluctuate wildly against major currencies. On January 1, the exchange rate stood at around 55 RUB/USD, down from its peak of over 80 RUB/USD in December 2014. The currency has been volatile since Russia imposed sanctions on Ukraine and the West retaliated with economic sanctions.

Extended Measures

Under the extended measures, banks will be allowed to use a fixed exchange rate for converting foreign-currency assets and liabilities that existed before January 2, 2016, when calculating large exposure norms N6 and N21. The rates have been set at:

  • 73 RUB/USD
  • 80 RUB/EUR

Additionally, the Russian central bank has lifted the valuation of FX items II, which allows banks to use a fixed exchange rate for converting foreign-currency assets and liabilities that existed before January 2, 2016. This measure was introduced in January 2016 at an initial rate of:

  • 73 RUB/USD
  • 80 RUB/EUR

Loan Loss Provisioning Measures

The country’s banking regulator has extended loan loss provisioning measures to allow flexibility in classifying loans affected by economic sanctions and restructured loans. The measures were introduced in December 2014 and have been repeatedly extended to support the struggling banking sector.

Institutional Framework for Resolving Financial Institutions

The Russian Federation has outlined its institutional framework for resolving financial institutions, which includes:

  • Central Bank (CBR) as the decision-making authority for supervision and resolution of banks and other financial institutions
  • CBR responsible for supervisory measures
  • Deposit Insurance Agency (DIA) responsible for resolution measures, with veto power over the CBR’s proposal

Conclusion

The extension of these emergency measures is seen as a sign of the Russian government’s continued efforts to stabilize the economy and address the ongoing challenges faced by the country’s financial sector.