Russia rules out capital controls

The Russian government does not intend to introduce any restrictions on capital movement despite the threat of excessive inflows damaging the economy. This is according to First Deputy Prime Minister Igor Shuvalov, RIA Novosti reported. Russia rules out capital controls "We did not take such decisions even during the most difficult period for us," Shuvalov said, referring to the 2008 economic and financial crisis. The International Monetary Fund has recommended that Russia implement capital controls to defend the economy against excessive inflows. "Managing capital inflows is one of the key challenges facing the Russian authorities," the IMF said in a report published on its website on Tuesday. "All lines of defense against excessive inflows - macroeconomic and prudential policies as well as capital controls - should be considered." Instead of capital controls, Shuvalov proposed differentiating reserve requirements for banks, making them smaller for credit institutions seeking long-term investment. "We are studying the possibilities, being aware of the fact that we need to stimulate long-term capital, while short-term speculative funds can be very dangerous for the economy," Shuvalov said. Shuvalov said some emerging economies, in particular Brazil, were taking steps to stimulate long-term capital and at the same time stem short-term speculative funds. A senior Russian Finance Ministry official said on Wednesday he expected capital inflow into Russia as a result of concerns that Greece's debt crisis may spread to other Eurozone countries. "The inflow of hot money, leaving euro-denominated instruments, will be directed towards emerging markets, including Russia," said Sergei Storchak, who has been charged with attempted fraud but retains the strong support of Finance Minister Alexei Kudrin.

Russia rules out capital controls

"We did not take such decisions even during the most difficult period for us," Shuvalov said, referring to the 2008 economic and financial crisis.

The International Monetary Fund has recommended that Russia implement capital controls to defend the economy against excessive inflows.

"Managing capital inflows is one of the key challenges facing the Russian authorities," the IMF said in a report published on its website on Tuesday. "All lines of defense against excessive inflows - macroeconomic and prudential policies as well as capital controls - should be considered."

Instead of capital controls, Shuvalov proposed differentiating reserve requirements for banks, making them smaller for credit institutions seeking long-term investment.

"We are studying the possibilities, being aware of the fact that we need to stimulate long-term capital, while short-term speculative funds can be very dangerous for the economy," Shuvalov said.

Shuvalov said some emerging economies, in particular Brazil, were taking steps to stimulate long-term capital and at the same time stem short-term speculative funds.

A senior Russian Finance Ministry official said on Wednesday he expected capital inflow into Russia as a result of concerns that Greece's debt crisis may spread to other Eurozone countries.

"The inflow of hot money, leaving euro-denominated instruments, will be directed towards emerging markets, including Russia," said Sergei Storchak, who has been charged with attempted fraud but retains the strong support of Finance Minister Alexei Kudrin.