Current problems of banking regulation to ensure economic growth in the context of declining oil prices and the development of ecosystems

Alexey Vedev

Working Papers from Gaidar Institute for Economic Policy

Abstract: A slump in prices on the world oil market in Q1 2020 significantly aggravated negative trends in the Russian economy. The decline in economic activity and the outflow of non-residents' funds from the Russian market had an adverse impact on the national credit and banking system. A possible strengthening of the sanctions pressure on Russia in the near future could further exacerbate the situation and slow down the growth rate of the Russian economy. However, the scale of these consequences and the extent of their negative impact will largely depend on the stabilization measures taken by the government and the Central Bank of the Russian Federation, their completeness and timeliness. Despite the fact that financial markets and credit and banking institutions continued to function practically at full capacity during the crisis induced by the coronavirus pandemic, the risks in the banking sphere have significantly increased and additional measures may be required from the regulator at any moment. It is primarily related to such directions of regulative activity of the Bank of Russia as improvement of organization and methodology of banking supervision, monitoring of stability of the banking sector, inspection of credit institutions. With that in mind, the tasks of increasing efficiency of the system of banking sector regulation and ensuring its sustainability are becoming more and more urgent. Meanwhile, global economic trends now increasingly require banks to accelerate the transition from traditional business models to the formation of a financial ecosystem based on the use of modern digital tools. This requires modernization of the entire banking supervision system, implementation of new regulatory principles and control methods, adaptation of traditional approaches to new conditions. The study will analyze the negative effects of oil shocks on the financial condition of banks operating in the Russian Federation. It will also analyze in detail the relevant international experience of overcoming crisis phenomena in the financial sector resulting from price volatility in energy markets. The result of the study will be the development of recommendations to improve banking supervision and regulation in order to implement organizational and stabilizing measures and strengthen confidence in banks as financial intermediaries, as well as proposals for the introduction of new mechanisms to neutralize banking risks in the technological transformation of the Russian financial sector.

Keywords: Russian economy; banking regulation; economic growth; oil prices; Bank of Russia; banking sector (search for similar items in EconPapers)
JEL-codes: E58 G21 G24 G28 O13 O43 O47 Q32 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021, Revised 2021
New Economics Papers: this item is included in nep-cis
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