Siluanov: Financial regulation reform as the key factor of stability
Russian Finance Minister Anton Siluanov discussed financial regulation in his speech at the conference organized by the Washington-based Institute of International Finance during a G20 meeting in Mexico.
Specifically, he focused on the currently being planned financial regulation reforms proposed by the G20 which are to be developed by the Financial Stability Board, which, in his words, is a necessary but insufficient condition for restoring stability to the global financial system.
"We believe there is a weakness in the regulation and control over financial institutions, with most policies being procyclical. In this context, the reform of financial regulation proposed by the G20 and developed by its Financial Stability Board, is definitely a necessary condition for the system's revival. But is it sufficient? I don't think so," Mr. Siluanov said.
He cited the situation in the Eurozone as an example. "The sovereign debt crisis in the European countries poses a serious threat to financial stability, given the strong interconnectedness between government finances on the one hand, and the banking sector and traders on the other," he said, adding that these informal destabilizing factors are also present in the Russian economy.
The Russian authorities are working to improve the quality of the capital of the country's financial institutions, to keep liquidity at an acceptable level and reduce the system's procyclicality. However, in Mr Siluanov's view, the development of new financial regulation standards requires extreme care today, given the current global financial instability.
The Russian minister called for his foreign counterparts to bear in mind the potential macroeconomic consequences of introducing new regulatory mechanisms.