Gold and foreign exchange reserves of the Russian Federation - the concept, structure and directions of spending. Gold reserves
Gold and foreign exchange reserves are the reserves of foreign currency and gold of the country. They are kept in the Central Bank. These funds are at the disposal of government bodies. Gold and foreign exchange reserves are used in settlements for foreign trade transactions, to pay off the country's external and internal debt, as well as for investment projects.
The need to create
Gold and foreign exchange reserves are required to cover the temporary excess of payments for various types of international settlements over budget revenues. The size of the reserves held by the country's central bank is an important indicator. Its value characterizes the ability of the state to make constant payments related to external payments.
In other words, gold and foreign exchange reserves are highly liquid financial assets. They are under the control of government agencies that carry out monetary regulation.
These funds, if necessary, are directed to finance the resulting deficit in the country's balance of payments.
Signs of gold and foreign exchange reserves
The stocks held by the Central Bank of a country have the following characteristics:
Are national highly liquid reserves, which belong to the main instruments state regulation when making international payments;
They act as evidence of the strong position of the state in financial terms;
- are the guarantor of the stability of the national currency;
- ensure the uninterrupted fulfillment of the country's international obligations.
Composition of gold and foreign exchange reserves
Stocks stored in the Central state bank are divided into two groups of assets. The first of these includes gold, which can be in coins and bars, as well as platinum, silver and diamonds. These assets can always be put up for sale or used in some other way, which will make it possible to fulfill their obligations to repay the external debt.
Gold and foreign exchange reserves of the second group are funds in foreign currency. In Russia, it includes the euro and the US dollar. The assets of the second group in our country are also represented by special positions and rights in the IMF.
Management of gold and foreign exchange reserves
Three models have been developed and are in operation that determine the relationship for the disposal and distribution of state reserves. Gold and foreign exchange reserves are owned by the Treasury or the Ministry of Finance. At the same time, purely technical functions are assigned to the Central Bank.
Some gold and foreign exchange reserves of the countries of the world are subject to a specific management mechanism chosen by the Treasury of a given state. This is the case, for example, in the UK.
Gold and foreign exchange reserves of the countries of the world can be owned Central Bank country. He is also the manager of these reserves. This model is adopted in Germany and France. The central banks of these countries manage their gold and foreign exchange reserves and make independent decisions on the structure of building state reserves. Mixed models for the disposal and ownership of gold and foreign exchange reserves are adopted in Russia, Japan and the United States.
Government stock requirements
The reserves that each country creates are insurance. They are able to protect national economy any state from possible macroeconomic risks. In this regard, the gold and foreign exchange reserves of the Central Bank must meet a number of requirements. One of them is versatility. This means that it can be used in all industries and areas.
Gold and foreign exchange reserves must also have the ability to quickly move in space.
Any placement of stocks provides for their return over time. That is why the maintenance and formation of gold and foreign exchange reserves requires certain costs. The Central Bank does not receive income from the storage of stocks. However, with a sufficiently large number of them, the state may decide to issue loans to other countries at interest.
Impact on inflation
Do the gold and foreign exchange reserves of the country have an impact on the growth of the depreciation of the money supply? This issue is still controversial. There is a certain opinion that with the growth of stocks, the quantity decreases. money supply in the country, which helps to reduce inflation. However, most scholars do not agree with this position. They argue that with the growth of government reserves, the inflation rate in the country will certainly rise.
Security of the gold reserve
Ensuring a certain level of government stocks allows you to perform a number of tasks. Among them are the following:
Country currency support;
- maintaining confidence in the policy of the state;
- management of credit and monetary resources;
- avoiding a shock during a crisis by reducing external vulnerabilities and maintaining liquidity financial resources in foreign currency;
- maintaining the country's rating as a reliable and self-confident state;
- the role of the support of the national currency, supported by external assets.
Gold and foreign exchange reserves of Russia
The reserves of the Central Bank of our country are formed from two parts. One of them is the excess income received federal budget. It was from them that the formation of the Russian Federation took place in 2004. The second component is international reserves, which are managed by the Bank of Russia. These funds, expressed in foreign currency, have different functions and sources of formation. However, at this stage, their investment in the country's economy is considered inappropriate.
As of November 22, 2013, they amounted to 505.9 billion US dollars. Their main share falls on euros and dollars (90%). Nine percent is gold.
Gold and foreign exchange reserves of the Russian Federation are presented mainly in US dollars (over 64%). Only twenty-seven percent of the stock structure is allocated to the euro. These indicators testify to the dollar orientation of the export-import operations of Russian manufacturers.
There is an upward trend in foreign exchange assets held in the reserves of the Central Bank. This is facilitated by strengthening stock market Russia. In this regard, the share of monetary gold in the reserves is constantly decreasing. This is due to a drop in the reliability of these investments. Over the past two decades, the growth in the price of gold has significantly lagged behind inflationary processes. In addition, this asset is not liquid. It cannot be converted into cash in a short time. In addition, gold does not bring any income to the Central Bank. In this regard, the shift in emphasis in favor of foreign exchange assets becomes understandable.
Similar trends are typical for other countries. The central banks of a number of states (Holland, Belgium, Australia, etc.) have already started selling gold from their reserves.
US gold reserves
America's reserves include all the currency that is in circulation. This does not take into account the funds that lie in the cash vaults of the authorities. In addition, the composition of US gold and foreign exchange reserves includes the finances of commercial banks kept in the accounts of state reserve banks.
When calculating the extended dollar overhang, the government's debt is included, reduced by the amount of those liabilities that are on the balance sheet of the Federal Reserve System. When calculating this indicator take into account the amount of international obligations and assets of the country's authorities.
The US gold and foreign exchange reserves (according to the analysis) provide only fifteen percent of the money supply. If those who are the holder government papers, decided to pay them off because of distrust of the dollar, then the value of the security of the money supply would be only three percent.
The United States remains the world's largest gold holding nation, despite the fact that the current volume of this precious metal almost three times lower than the post-war maximum. At the same time, the size of the total reserves of the Central Bank of Europe and all European countries is more than ten thousand tons of gold, and this is higher than this indicator in the United States.
Economists analyze data on the ratio of gold reserves available to the country and the amount of its public debt. In this plan best positions has Switzerland, and the US is the worst.
To become the first among the states of the world community in terms of the volume of accumulated gold, the United States of America allowed their geographical position And geological features. Only during the first five years of the so-called "gold rush" was mined about three hundred and seventy tons of precious metal. This explains the high share of gold in the state reserve of the country. It is currently about seventy-four and a half percent. In mass terms, this is 8133.5 tons.
It is also quite natural that the world's largest gold vault has been built in the United States. It is owned by the Federal Reserve Bank. The fact that the eurozone has a larger amount of yellow metal in par value is explained by the fact that the International Monetary Fund is located on its territory. However, gold reserves in Europe are under the control of the United States Congress. Even the decision to sell the precious metal must be subject to a US resolution.
As of the beginning of July, Russia's external debt fell to $485.5 billion, while international reserves increased to $456.8 billion, according to the G.V. Plekhanov. As Izvestia writes with reference to the text of the study, in the foreseeable future, reserves may exceed external debt, which will become a safety margin for our country in the event of new Western sanctions against Russia.
Now Russia, as part of its international reserves, is actively increasing the volume of gold, the document emphasizes. Over the past seven years, the share of this metal has grown from 7.5% to 17.7%. By replenishing the gold reserves, the Central Bank supports the gold mining industry. In 2018, Russia may reach the fifth place in the world in terms of gold reserves after the US, Germany, Italy and France. In addition, the regulator creates an additional financial cushion in case of unforeseen circumstances in the international debt market.
A competent increase in gold reserves, in which the accumulated currencies and gold collectively rise in price, thereby increasing the volume of reserves, is the merit of the Central Bank and an attempt to protect against Western sanctions, admits Maria Salnikova, a leading analyst at Expert Plus. However, the volume of gold reserves is announced as the result of official research by the Plekhanov Institute, and we do not know what is actually happening, she emphasizes. Unfortunately, given the bankruptcy pension fund, less modest data on the volume of gold reserves cannot be ruled out.
But, Salnikova believes, it is unlikely that the authorities will seek to cover the entire volume of external public debt with international reserves. Given that the Russian Federation is increasing the share of gold in gold reserves and at the moment it is already more than 17%, the fall in the price of yellow metal (since April it has decreased by almost 10%, to $ 1,220 per troy ounce) is an unfavorable situation. That is, at least we can expect that the Russian Federation will continue to gradually reduce its external debt, but without full coverage of the entire amount.
From point of view economic theory, Alor Broker analyst Aleksey Antonov notes, reserves, of course, are of paramount importance for the stability of the economy, and low level debt - for the perception of the country by creditors, for the possibility of borrowing. On the other hand, he points out, Adam Smith already understood why "he does not need gold when he has a simple product." That is, translated into modern language, the country should produce, at worst, a wide range of goods and services with high added value, and at best, computer code, and then export them, and store the funds received in reserves, or, better, invest back into production and code development.
In our case, says the expert, we export mostly raw materials, and “store” the money received for more severe times, which will certainly come when the price of oil falls again. From the point of view of creditors, Russia is indeed a country that can be trusted with money, because it has a low level of debt, and this debt is secured. But this is where the prospects end, because under the current economic and political model, there will be no explosive growth.
A potential investor compares Russia with other developing countries, and understands that he could earn about 55% per annum over the past 10 years in other developing countries and only 6.5% in Russia, and votes in dollars, Alexey Antonov states. And the sanctions further worsen the investment climate, make it unpredictable, because investments in Russian OFZs can be banned at any time, for example, for American companies and citizens, and possibly European ones.
I touched upon the topic of gold and foreign exchange reserves (GFR) of the Russian Federation. She aroused great interest. According to this publication, I am asked a lot of questions, indicating a vague idea of the majority of readers about how the central bank works, how the emission (issuance) of money is organized, what is gold reserves and the like. This prompted me to continue talking about the gold reserves.
They are also called "international reserves" or "reserve assets" of the Russian Federation. What is their legal status and why are they needed at all? On the website (Central Bank of the Russian Federation) we read the definition:
"International Reserves ( reserve assets) of the Russian Federation are highly liquid foreign assets at the disposal of the monetary authorities of the country - the Bank of Russia and the Government of the Russian Federation.
The country's international reserves include external assets available and controlled by the monetary authorities in order to meet the needs for financing the balance of payments deficit, conducting interventions on currency markets to influence exchange rate currency and for other relevant purposes (such as maintaining confidence in national currency and economy, as well as a basis for foreign borrowing). Reserve assets must be real assets in a freely usable foreign currency. In addition, the category of reserve assets may include assets denominated in gold and SDRs. (SDR - Special Drawing Rights - V.K.)» .
The necessary information about the gold reserves of Russia can be found on the website of the Bank of Russia. Here are the latest statistics on these gold reserves. As of January 1, 2017, Russia's total gold reserves were $377.74 billion. As of October 1, 2017, they already amounted to $424.77 billion. As we can see, despite the economic sanctions, the unstable situation on the world oil market, economic stagnation within the country, Russia's gold reserves (they are also international reserves) grew by $47 billion over ten months. It can be expected that at such growth rates, reserves can increase by more than fifty billion per year. The leaders of the government's financial and economic bloc like to flaunt the growth of reserves as evidence of their achievements.
Now let's look at the structure of the gold reserves. As of October 1 of the current year, they included (billion dollars): monetary gold - 73.60; foreign exchange reserves - 351.17. The latter, in turn, include (billion dollars): special drawing rights (SDR) - 6.83; reserve position in the International Monetary Fund - 2.99; other currency assets — 341.35.
Many people believe that the gold and foreign exchange reserves of Russia and the gold and foreign exchange reserves of the Bank of Russia are one and the same. This is not true. As follows from the above definition of gold reserves, they consist of two parts: 1) reserves of the Bank of Russia; 2) reserves of the Government of the Russian Federation. The Bank of Russia provides on its website many details regarding gold reserves. There is only a layout, which part of them belongs to the Central Bank, and which part belongs to the Government of the Russian Federation.
The website of the Bank of Russia gives what should be attributed to the Government's foreign exchange reserves:"Part of the Reserve Fund and the Fund national welfare of the Russian Federation, denominated in foreign currency and placed by the Government of the Russian Federation on accounts with the Bank of Russia, which is invested by the Bank of Russia in foreign financial assets, is a component of the international reserves of the Russian Federation”.
I was not too lazy to find data on the Reserve Fund and the NWF on the website of the Russian Ministry of Finance, their currency component (there is data for the middle of this year), and calculated their share in the total volume of foreign exchange reserves of the Russian Federation. It turned out that by the middle of the current year, the share of the Government (Ministry of Finance) in the foreign exchange reserves of the Russian Federation amounted to about 27%, and the share of the Bank of Russia - 73%.
What is the difference between the foreign exchange reserves of the Central Bank and the Ministry of Finance? The former are intended to protect the national monetary unit, maintaining the stability of its exchange rate (through foreign exchange interventions). The second - to protect the state from various adverse changes in the economic and political situation. For example, to close deficits state budgets, making some purchases on the world market in case of emergencies. Sufficiency of foreign exchange reserves of the Ministry of Finance — essential condition ensure national security states.
For reference, I note that two decades ago (in 1997), the Ministry of Finance accounted for about 60% of the international reserves of the Russian Federation, and the Central Bank - the remaining 40%. There is a trend of increasing monopolization of the country's international reserves by the Central Bank. Based on the proportion fixed in the middle of this year, it can be assumed that as of October 1, 2017, the Bank of Russia owns almost 250 billion dollars of foreign currency (this is without monetary gold, SDRs and a reserve position in the IMF).
Unfortunately, nothing is said about the international reserves of the Russian Federation in the Constitution of the Russian Federation. But the Federal Law on the Central Bank has something on this subject. Already in article 2 we read:“... In accordance with the purposes and in the manner established by this federal law, the Bank of Russia exercises the authority to own, use and dispose of the property of the Bank of Russia, including gold and foreign exchange reserves of the Bank of Russia. Withdrawal and encumbrance of the said property without the consent of the Bank of Russia are not allowed…”.
This article can be understood only as follows: The Government of the Russian Federation cannot dispose of the gold and foreign exchange reserves of the Bank of Russia. That portion of international reserves which is attributable to reserve fund and the NWF, can be used at the discretion of the Government (Ministry of Finance), and most of the international reserves (almost ¾) are beyond the reach of the government and other branches of government (legislative and judicial). Many naively believe that in difficult moments of history we will be able to rely on a gigantic resource, loudly called the "International reserves of the Russian Federation."
For those who naively count on this, an additional clarification is made on the website of the Bank of Russia. Under the heading "" you can read the following:“A key element of the legal status of the Bank of Russia is the principle of independence, which is manifested primarily in the fact that the Bank of Russia acts as a special public institution with the exclusive right to issue money and organize monetary circulation. It is not a public authority…”. From this fragment it follows that the gold reserves of the Central Bank do not belong to the Russian state. Consequently, these reserves do not belong to the people, that is, to you and me.
Thank God in Lately In connection with the tightening of economic sanctions against Russia, we started talking about such a threat as a possible freezing (or even confiscation) of the foreign exchange reserves of the Bank of Russia. Prior to this, no one even wanted to discuss such an option. Even after the West blocked Libya's international reserves in 2011 (in the amount of $30 billion), we were greeted and said that this story is not about us. Today, many politicians, financiers and journalists consider this scenario as quite probable. But the scenario of a possible blocking of international reserves of the Russian Federation by the Bank of Russia (if suddenly they turn out to be necessary for our state) does not even occur to anyone.
Some lawyers with whom I tried to discuss these conflicts of Russian law reproached me for exaggerating. Although they agree that the issue of the status of the international reserves of the Russian Federation is really cloudy and the norms of Russian law relating to reserves can be interpreted in different ways. I think that all these formulations were initially clouded in the interests of the “owners of money”. They needed an institution in our country called the “central bank”, which would constantly accumulate the products of the “printing press” of the US Federal Reserve (dollars), lending almost interest-free to the West. At the same time, this institution should not allow the use of currency to solve its national problems of an economic, social and military-political nature. Dollar bills and treasury bonds are IOUs, and the debtor (the Fed and the US Treasury) will do everything possible to ensure that these receipts are never returned to him.
Of course, what I said about the Central Bank's gold reserves, the most stubborn skeptics (or, conversely, optimists) can call a pessimistic version. But this version was already confirmed several years ago. It happened in Argentina in 2010. The then President Christina Kirshner created an unpleasant precedent for the owners of money. She, as head of state, decided to take control of the Central Bank of Argentina. In 2010, she needed the foreign exchange reserves of the Central Bank to pay off the country's external debt. It was about the amount of 6.6 billion dollars, which was approximately 1/7 of the international reserves of the Central Bank and half of the total external sovereign debt.
When coated public debt by obtaining foreign loans, the country would become more and more dependent on the world's usurers. With the use of the reserves of the Central Bank, Argentina in a short time could completely get rid of external debt dependence. It is not difficult to imagine how the financial international reacted to such an attempt by a brave woman. The then president of the Central Bank of Argentina Martin Redrado refused to carry out the order of Christina Kirchner, and she signed a decree on the dismissal of Redrado.
In response, Redrado filed statement of claim to the court of Buenos Aires, and after a couple of days (what promptness!) the Argentinean Themis canceled the decree of the president of the country. The judge who presided over the case explained his decision by saying that "The president does not have the authority to decide on the resignation of the head of the Central Bank". Surprisingly, the court not only decided to reinstate Redrado as president of the Central Bank, but also demanded the annulment of the decision of the President of Argentina to use the international reserves of the Central Bank to pay off the country's debt.
In the end, the president of the National Bank, Martin Redrado, was fired, but the decision to ban the use of international reserves of the Central Bank was upheld. It is noteworthy that in 2010, the accounts of the National Bank of Argentina in American banks were frozen by a New York court. The decision was made on the basis of the requirements of creditors - holders of Argentina's external debt. Formally, the decision of the New York court was not connected with the decision of Christina Kirchner. However, experts knowing the rules games in the global financial system, they believe that this was a warning from the financial international to the president of Argentina. I believe that this was a reminder to those countries that the financial international obliged to accumulate foreign exchange reserves and print their "national" banknotes only against the security of pieces of paper called "dollar" or "euro".
Later, the persecution of the former president of Argentina, Cristina Kirchner, began personally (she left the post of president of the country in December 2015). A court in Buenos Aires decided to freeze the assets of Cristina Fernandez de Kirchner. She was charged with recent months of her presidency, she allegedly manipulated central bank Argentina to artificially support the Argentine peso. At the direction of Christina Kirshner, the regulator allegedly sold US dollars on the derivatives market at "low price to the detriment of the country's financial system".
The ordered nature of the case, which the court “sewed” on the former president, is beyond doubt. This resilient woman has resisted pressure from the United States and the "masters of the money" for many years, defending the sovereignty of Argentina. The masters of money are striving to completely destroy the traces of the "Argentine precedent" to remove the central bank and international currency reserves from the control of the world financial international and their resubordination to the president and government.
However, so that our conversation is not too pessimistic, I will add a "spoon of honey" to it. I know one current Central Bank, where there are no problems with the use of gold reserves in the interests of the state. This National Bank China (NBK). On the balance sheet of the Chinese Central Bank today are reserve assets equal to 3.1 trillion dollars (as of October 1, 2017). The PBOC is part of the executive branch of government, that is, it is an institution of the PRC government. Chinese gold reserves in the current mode can be used (and are being used) to control exchange rate yuan.
But if necessary, these reserves (by decision of the government or even the National People's Congress - the Chinese Parliament) can be used for any other purpose - the repayment of external debts, the provision of loans to other states, the acquisition of strategic assets abroad, the implementation of emergency purchases of goods, and the like. That is, in China, a history similar to the Argentine one, by definition, cannot arise. I think that in the context of the topic of gold reserves we are discussing, Russia should learn from the sad lessons of Argentina and at the same time take into account the positive experience of China.
Roman Nekrasov, founder of market-lab.org 09.01.2017 14:46
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In the next “Overview of the activities of the Bank of Russia in managing foreign exchange assets”, the mega-regulator spoke about how he managed foreign exchange reserves from June 30, 2015 to June 30, 2016.
Investment decisions on the placement of reserves in certain types of assets are made entirely in the Bank of Russia, without the involvement of third parties. The Board of Directors determines the objectives of managing foreign exchange assets, the list of acceptable investment instruments and the target level of foreign exchange risk. The Bank of Russia Committee responsible for the investment strategy makes decisions on the level of interest and credit risk and determines the list of counterparties and issuers. End implementation investment decisions carried out structural divisions Central Bank.
The main share of foreign exchange assets by the Bank of Russia is placed in government securities, which accounted for 76% as of mid-2016 (Table 1).
Table. Structure and dynamics of foreign exchange assets of the Bank of Russia
In second place in terms of importance are deposits and account balances (15%), in third place are non-state securities(3.5%). The strongest growth in 2015-2016 was noted in deposits and account balances; the Central Bank of the Russian Federation did not increase significant investments in government securities. However, the share of non-government securities increased significantly from 1.1% to 3.5% (by $7.6 billion).
The main part of foreign exchange assets has been allocated to 3 countries: the USA, France, Germany (Figure 1). Inside Russia, the Central Bank of the Russian Federation placed only 8.5% of foreign exchange assets.
Figure 1. Geographic distribution of foreign exchange assets of the Central Bank of the Russian Federation By type of currency, the dollar and the euro prevail, they account for 88% of total foreign exchange assets (Figure 2).
Figure 2. Distribution of the Central Bank's foreign exchange assets by types of currencies The highest return on the carry trade in 2015-2016 was shown by the Central Bank's investments in assets denominated in the Australian dollar (+2.35%) and the pound sterling (+1.11%). At the same time, the pound fell sharply after the Brexit referendum, which will be reflected in the data of the next review. The share of the pound in the total portfolio of foreign exchange assets accounted for 8.8%.
Every reasonable person has savings for a rainy day. States are no different in this regard. Only the role of a nest egg in countries is played by gold and foreign exchange reserves (GFR). The main manager of these funds is the Central Bank and the Government of the Russian Federation.
The gold and foreign exchange reserves of the state are assets with high liquidity, which are under the control and management of the main executive body responsible for credit and financial regulation.
The balance sheet of the Central Bank of the Russian Federation is formed by assets and liabilities. The first group includes cash and other financial instruments. The second one contains obligations. The balance must be in balance. This is an axiom.
When issuing money, the emerging money must be provided with something. Gold and foreign exchange reserves are designed, among other things, to solve this problem. Gold reserves are the most reliable and liquid way to secure the money issued in the country. However, this is not the only task that the Central Bank's gold and foreign exchange reserves are solving.
Why do we need
The purpose of the financial instrument encoded in its name. Gold and foreign exchange reserves are an autonomous monetary fund - the country's reserve. Funds of gold reserves are used in the event of any unforeseen, often crisis situation. This is the same stash for a rainy day only on a national scale.
As practice and actions of the Central Bank of the Russian Federation show, gold and foreign exchange reserves are spent on solving the following tasks:
- maintaining a stable exchange rate of the national currency;
- financial assistance or lending from other states;
- the need to cover the country's balance of payments deficit.
Simply put, gold reserves are responsible for a stable position financial system Russia.
What parts are
The gold and foreign exchange reserves of the state have a fairly simple structure. They consist of four parts:
- gold in bars and coins;
- funds in foreign currency;
- depository receipts or SDRs;
- reserve position or voting share in the IMF.
You need to understand that the listed sources from which the Central Bank of the Russian Federation gold reserves are formed are not the same both in size and in value.
For Russia, the main elements of this structure are gold and foreign currency. They account for the lion's share of the existing gold and foreign exchange reserves.
Cash denominated in foreign currency is also heterogeneous. In this capacity are:
- cash;
- account balances;
- deposits in foreign banks;
- securities.
Monetary gold is considered an integral part of gold reserves. Special rooms are equipped for the storage of 995 ingots and coins. This is the gold reserve of Russia.
Status for today
The policy of the Central Bank of the Russian Federation in relation to gold and foreign exchange reserves is distinguished by a balanced and systematic approach. In the absence of a crisis, the regulator seeks to increase this financial reserve of the country.
The Central Bank of Russia updates information on the state of the country's gold and foreign exchange reserves on a weekly basis. For up-to-date information, you need to go to the official website of the regulator.
The structure of the Russian gold reserves is as follows:
- securities - 77%;
- cash currency and deposits - 10%;
- monetary gold - 10%;
- SDR - 2%;
- position in the IMF - 1%.
Who rules
There are three approaches or models for managing the state's gold and foreign exchange reserves.
- The owner and manager of the gold reserves is the Central Bank of the State. The regulator decides all issues related to this reserve. In such a model, only the Central Bank can increase or decrease gold and foreign exchange reserves, as well as determine their structure. A similar approach was implemented by France and Germany.
- The owner and manager of the gold reserves is the Ministry of Finance or the State Treasury. All key decisions are made by these bodies. With this approach, the Central Bank is only responsible for the implementation technical functions. The United Kingdom has implemented a similar model.
- Mixed approach. In this model, the powers to form and manage the country's gold and foreign exchange reserves are divided between the Central Bank and the Ministry of Finance or the Treasury. This approach has been implemented by Russia, Japan, and the United States of America.
How are they managed
Financial elites within the state often debate about the correct methods of managing gold reserves. The subject of the dispute is simple: should gold and foreign exchange reserves be used to extract additional income in favor of the state.
On the one hand, the task of such a financial reserve is to guarantee the availability of funds in the event of a crisis. On the other hand, some economists believe that money should not lie idle. They should be invested, and the profits received should be directed to the state budget.
There is sound grain in the arguments of the supporters of each of the two approaches.
In most states, the Central Banks take a conservative position and follow the path of minimizing risks. The Russian Central Bank is no exception to this rule.
The regulator places funds from gold reserves exclusively in highly reliable instruments that have state guarantees. This approach brings less income, but guarantees better liquidity and safety of invested money.
The Bank of Russia minimizes existing risks. When placing funds of gold and foreign exchange reserves, the principle of diversification is used. For example, money is invested immediately in a number of freely convertible currencies. They are placed in US dollars, pounds sterling, euros, Swiss francs, Chinese yuan and Japanese yen.
When choosing securities for investment, the Central Bank of the Russian Federation uses credit ratings reliability of issuers from leading rating agencies peace.
Change of size
The country's foreign exchange reserves are a dynamic value. Depending on the current macroeconomic situation, the Central Bank actively disposes of this additional reserve. GRR can both increase and decrease. Each such change leads to an adjustment of the economic situation in the state.
An increase or decrease in international reserves does not necessarily reflect the stability or level of development of the economy. Often, such changes show what kind of monetary policy is pursued by the Central Bank.
Many prominent financial experts and analysts express the idea that a constant increase in the volume of gold reserves should not become an end in itself for the Central Bank. It should not be a task to make the financial reserve as large as possible.
Otherwise, the state will face the problem of irrational use of Money. The budget will receive less profit from unmade investments.
Thus, one of the main tasks of the Central Bank is to ensure a sufficient, but not excessive level of gold and foreign exchange reserves.
Adequacy
A number of methods have been developed that allow the specialists of the Central Bank to determine the level of gold reserves required in the current economic situation.
Many developed countries of the world assess the sufficiency of the financial reserve based on the volume of imports. When using this criterion, the minimum required amount of gold and foreign exchange reserves should be equal to the total volume of imports of the country for three months.
According to another method, the size of the gold reserves is tied to the gross domestic product(GDP). The stock level should not be lower than 9% of the specified indicator.
Taking into account the current size of Russia's gold and foreign exchange reserves of 447.4 billion US dollars, we can say that its actual value exceeds the recommendations of foreign financiers. Moreover, the Central Bank of the Russian Federation continues to increase the amount of gold reserves.
In connection with this, we can conclude that the Central Bank, in a difficult political situation, decided to play it safe and increase the financial cushion, which is already sufficient today.
Part of Russia's gold reserves in the USA
As of early 2018, $109 billion of total amount Our country's gold and foreign exchange reserves are held in the debt obligations of the United States of America.
Many prominent domestic economists (M. Delyagin, A. Razuvaev) say that this is a serious mistake on the part of the financial bloc of the Government of the Russian Federation.
The risks of such investments are related to the fact that state debt The US is growing every year. US budget expenditures significantly exceed revenues. The situation under consideration looks like a standard financial pyramid. At a critical moment, Americans may simply refuse to pay their bills. This has already happened during the default in 1971.
At the same time, the Central Bank of the Russian Federation does not make any attempts to return the funds of gold and foreign exchange reserves back to our country. One gets the impression that the leading domestic financiers are satisfied with this situation.
It should be noted that the Russian Federation is not a leader in buying US debt. For example, our country is more than 10 times behind China and India in this matter.
There is also an alternative opinion. A number of economists (N. Krichevsky) consider this problem far-fetched in many respects. They say that the Central Bank of the Russian Federation correctly chose American instruments for storing part of its gold and foreign exchange reserves.