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The Central Bank of Russian Federation (the CB, also known as “the Bank of Russia”) may soon be alienated from its main functions of control over commercial banks. It is not for first time deputies of the State Duma of Russian Federation come up with the idea of a new regulatory authority – the so-called “mega-regulator” – that will control insurance industry, banks, pension funds and other professional market participants. Based on recent parliamentary discussions, a new resolution project has been prepared and later presented to Sergey Ignatiev, chairman of the Bank of Russia. Inside sources from the president’s administration secretly notify that some influential officials are indeed really interested in alienation of the CB from its functions to control commercial banks.

The possibility has long been discussed. In 2004, Vladimir Putin signed an administration reform decree, in accordance to which regulatory, control and supervision functions should be separated if they are initially united within one authority. The Central Bank, however, was successful in holding its position. In 2006 Russian government agreed upon the Financial Markets Development Strategy which emphasizes the importance of development of a special federal service authority with a banking supervision function among other things. Finally, at the end of last year Valery Zubov, who is the deputy of the State Duma of Russia, proposed a “mega-regulator” idea which is to be a self-regulatory organization in possession of both the state and private market participants. The discussions were also held around other most likely candidates to carry the control functions over commercial banks in Russia – among others, the Russian Financial Monitoring Authority (“Rosfinmonitoring”) and the Federal Financial Markets Service were named.

The ones that are currently most interested in proposed changes do not originate from the Ministry of Finance (the “Minfin”) – at least, this is what they officially state. For instance, Alexei Savatjugin, who is the head of Minfin’s department of financial policy, recently announced that the idea to part the Central Bank with its control functions belongs solely to Valery Zubov himself. “The idea has never been discussed yet inside these walls. Valery Zubov’s proposal does not surprise me, however. Moreover, we are ready to discuss it in details if his position becomes more reasoned. We understand that Russia’s banking system needs improvements, but alienation of the CB from its control functions needs more reasoning. Like, for example, if somebody convincingly proves that simultaneous banking regulation and monetary policy leads to a conflict of interests”, - that’s what Alexei Savatjugin said in his interview.