Evolution, Problems and Prospects
New Horizons in Money and Finance series
Edited by David Lane
Chapter 3: The Present and Future of Banking Reform
William Tompson The Russian banking system in 2001 presented a paradox. Russian banks were, on the face of it, healthier than they had ever been. They were also, both politically and economically, more of an irrelevance than at any time since the early 1990s. The aim of this chapter is to examine this paradox in an attempt to understand the place of the banking system within the Russian polity and economy, as well as to assess the prospects for banking reform. The discussion begins with an assessment of the state of the sector in early 2001, before turning to consider in turn the banks’ political and economic role in Russia since the August 1998 ﬁnancial crisis. This will be followed by an examination of the outlook for banking reform, a look at the interim ‘coping’ strategies being devised to compensate for the weakness of the banking sector and a brief conclusion. THE STATE OF THE SECTOR Assessing the health of Russia’s banking sector remains notoriously diﬃcult.1 While the overall quality of Russian economic data has improved in recent years, there remain particular problems with banking data. First, there are good reasons to doubt the completeness and accuracy of banks’ reporting of their positions to the Central Bank of Russia (CBR). Secondly, the data are based on Russian rather than international accounting standards. Russian accounting standards (RAS) leave the banks much greater freedom to decide whether or how to classify problem loans and do not generally require assets such as...
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