MOSCOW (Realist English). Recently, an ideological discussion has arisen in the financial block of the government about how to accumulate reserves? Two poles of opinion on this issue have been identified. One pole stands for yuan and the currencies of friendly countries, and the other for rubles. The apologist of the version with rubles was the assistant to the President of Russia Maxim Oreshkin.
Unfortunately, neither one nor the other pole focuses on the main thing: it is necessary to store reserves, but it is categorically contraindicated to accumulate them.
Vladimir Gamza, Chairman of the Council of the Chamber of Commerce and Industry of the Russian Federation on Financial, Industrial and Investment Policy, described the situation quite succinctly:
“There is no need to accumulate exorbitant international reserves, as is done in Russia now. Our country has recently put aside eight times more (about $600 billion) than is required by all reasonable standards (in Russia there are enough of them in the amount of $70 billion)! The excess foreign currency funds of the Bank of Russia should be used by the government for the mass creation of the most modern technologies, the technical modernization of industry and the issuance of interest-free loans for the implementation of large industrial projects. As for the government’s national reserves, they are very often converted into international ones and simply converted into various currencies by the Bank of Russia and put into a pot.”
Analysts of the telegram channel Spydell_finance report on Russia’s records on the trade balance, referring to the operational reports of the Central Bank of the Russian Federation. These funds need to be used wisely, instead of, as Paul Craig Roberts aptly put it, “strangling the economy in the fight against inflation.”
“We need to focus on the utilization of existing capacities, linking resources in the production of our own goods, the development of international production cooperation, the implementation of joint investment projects, including abroad,” writes economist Sergey Glazyev.
And he considers gold to be the best asset for storing reserves. In his opinion, the Central Bank should increase the share of gold in the gold reserves to 80%.
The excess foreign exchange rents, which are now coming to Russia in fairly large volumes, should be used as soon as possible to import advanced technologies, machine tools and complete equipment.
The problem is also that Russian legislation is not critically ready for operational investment in the industrial sector. A priori, there is no such direction as “project financing”, that is, receiving money for future results of economic activity. Today, the domestic industry can take them only on collateral principles. This relic of the banking system of the last century needs to be eliminated, along with a radical reform of the system itself.
In continuation of the topic of project investment, it is impossible to ignore the evolutionary proposal of Yuri Krupnov, a member of the Scientific Council at the Security Council of Russia, Chairman of the Supervisory Board of the Institute of Demography, Migration and Regional Development:
“It seems expedient to carry out a large-scale investment and technological maneuver by massively providing the state with investment funds in foreign currency (dollars and euros) to all domestic industrial enterprises for the purchase of the most advanced technological equipment up to complete plants. A prerequisite for obtaining funds is the availability of an investment project for industrial enterprises to modernize existing production or create fundamentally new enterprises.”
Such a measure, according to the expert, will allow creating fundamentally new financial and collateral mechanisms, including in relation to frozen gold reserves, which will create a basis for putting them into circulation.
The provision of foreign currency investment funds to enterprises can be carried out by an agent specially authorized by the Government of the Russian Federation on the basis of project requests from industrial enterprises of all types of ownership and by purchasing long—term debt securities from them for foreign currency – industrial bonds (bonds) at par (without discount and interest).
Sergey Gavrilov, the head of the State Duma Committee on Property, Land and Property Relations, has been making a similar proposal for six months. He believes that the excess funds of foreign exchange earnings, the funds of the National Welfare Fund of Russia (NWF) can be used to buy targeted bonds of state banks for subsequent lending to targeted industrial projects.
