II PANEL SESSION
"MONETARY AND FINANCIAL SUPPORT FOR CROSS-BORDER PARTNERSHIP"
Moderators of II panel session:
Oleg Preksin - Member of the Executive Board of FBA EAC, Vice-President of the ARB (Russian Federation), Deputy Chairman of the Russian Financial and Banking Union (RFBU), Deputy Head of the Subcommittee on Financial and Banking Activities of the RUIE Committee on International Cooperation, Askar Kishkembaev - Head of Secretariat of the Member of the Board (Minister) of Economy and Financial Policy.
During the discussion views were exchanged on ways to overcome instability in the monetary sphere and increasing financial and banking risks, to improve the system of cross-border payments, to increase the use of national currencies and the possibility of new regional currencies in Eurasia. It was noted that digitalization is becoming an important factor in increasing competitiveness in the financial and banking sector.
Representatives of Russian and international banking business, Russian and British scientific community, Russian Export Center, International Financial Center "Astana" and other organizations took part in the discussion of topical issues of cross-border cooperation.
The following issues were discussed during the session: Is there a shortage of monetary and financial support for cross-border cooperation in Eurasia? Does the explosive growth of the U.S. national debt for 27 trillion dollars create a real threat to the global monetary and financial system? Is the dollar able to maintain its dominant position? Prospects for using national currencies in cross-border settlements. Will the Chinese yuan in Asia take the same positions as the Euro in Western Europe or should a collective currency be expected here too? What can it be and how will it appear? The launch of the Central Bank of China and the plans of the Bank of Russia. The digital maturity of banks as a competitive advantage. Application of digital technologies (block-chains, electronic letters of credit, smart contracts) in international settlements to reduce risks and costs of commercial transactions. The main sources of targeted loans and investments for cross-border projects, including for participating SMEs. Trade finance from national and supranational sources. The role of PPPs in ensuring proper monetary and financial support for cross-border cooperation.
In his introductory speech A. Kishkembaev gave a brief overview of the financial sphere of the Eurasian Economic Union, where one of the main factors to increase the growth rate and competitiveness of the economies of the Union is the formation of a common financial market of the Union. The result of its creation will be the removal of existing barriers to the free movement of capital within the EAEC; increasing the availability and diversity of investment and banking services, facilitating access to financial resources and products for population and entrepreneurs. To implement this goal, the Concept of forming a common financial market of the EENA has been approved, which will make it possible to eliminate the existing barriers to the free movement of capital and financial services within the Union, and will ensure the availability and diversity of investment, banking and insurance products for individuals and business entities.
«The most important component in building a common market is a coordinated currency policy, ensuring the mutual convertibility of the currencies of the Union countries, and increasing their role in trade operations. The example of Europe before our eyes is the constant striving for the currency union, and already more than twenty years of experience in functioning of the single currency, taking into account the huge achievements and shortcomings. Of course, Europe has been striving for this for many decades. In the Eurasian Union, currency policy issues are on the agenda».
The development of financial cooperation was discussed in the speech of Denis Ivanov - Chairman of the Board of the International Bank for Economic Cooperation, a unique financial institution, which is a bridge between Eastern Europe and Asia, providing international trade. In his speech the Chairman of the Board of the IBEC drew attention to new opportunities that provide digital platforms for the security and speed of settlements, and the reasons that hinder the rapid spread of such technological solutions in the banking sector. Speaking about the international currency system, D. Ivanov showed the growing role of the Euro as the currency of international settlements and investment instrument, the share of which in the system of international settlements of SWIFT in October this year exceeded the share of the dollar. The speaker noted that "digital technologies are increasingly being introduced in the system of international trade. Against the background of the pandemic, the involuntary positive consequence of which was the acceleration of the use of digital platforms in almost all areas, in the focus of attention were the technologies of calculations based on the blockage".
In his speech Sergei Dubinin, Member of the Supervisory Board of VTB Capital, Head of the Department of Finance and Credit, Faculty of Economics, Lomonosov Moscow State University, touched upon the problems of developing countries caused by contradictions of the international monetary system based on the dollar, whose role is declining. Possible ways to solve them under certain conditions may be to realize the international potential of the yuan, the use of financial technologies offered by financial corporations, or building a multilateral clearing mechanism in the Eurasian Union.
А. Kishkembaev said that today the EAEC has set the task to expand the use of national currencies in mutual settlements, while there are no significant administrative and regulatory barriers in the implementation of cross-border settlements in national currencies.
Alexey Denisov, Managing Director for International Projects of the Russian Export Center, responsible for the development of operations in national currencies, answered the moderator's question «Is it possible to enhance the mutual cross-border settlements in national currencies within the Eurasian Union?» He noted that when deciding whether to peg settlements to any currency or to create a unit of account, political approaches always prevail due to the partial loss of financial sovereignty of the country. This problem can be overcome by increasing settlements in national currencies, which are the choice of importers and exporters. In these conditions the task of development institutions is to provide an appropriate financial infrastructure to ensure the provision of liquidity in national currencies, the provision of financing, the development of exchange instruments: currency pairs and trade in goods whose prices are determined in national currencies. The practice of REC on providing trade financing in different currencies is presented.
The discussion was continued with a speech by Yuri Ponomarev, Deputy Chairman of the Board of Directors of Energotransbank. In his speech he noted that the significant growth of political, financial and sanctions risks stimulates the search for alternative ways of keeping the countries' gold and foreign currency reserves. Under these conditions, one of the ways to diversify may be to invest in the debt obligations of regional partner countries with which long-term trade and economic cooperation is established.
Littlejohn George, Senior Advisor to the Chartered Securities and Investment Institute (UK), noted that in the face of huge debt accumulated problems, capital market participants must speak a common financial language when setting investment objectives. Despite the availability of private capital, as usual in crisis conditions, the main calculation when taking measures to recapitalize business is made on state mechanisms. He noted that Moscow's ratings as a financial center are growing, and it enjoys considerable trust from financial investors.
The new actual trend in the sphere of financial technologies is the development of digital currencies. Central banks of America, Europe and Asia are studying the possibilities of using digital currencies. In her speech Alma Obayeva, Chairman of the Board of the National Payment Council Non-Profit Partnership, touched upon the prospects of using the digital rouble for cross-border settlements. It was noted that the digital rouble can be attributed to the public good provided by the state. A feature of the digital currency may be the possibility of ensuring the targeted use of funds provided by the state. It was suggested that in the formation of new industries such as financial technologies in the common Eurasian market, it would be advisable to develop principles and approaches to harmonization of legislation in this area in advance, until the time when countries begin to independently form regulatory norms to avoid inconsistencies. It was suggested that the Eurasian Commission should consider the report of the Central Bank of Russia and organize its discussion in the Eurasian Union space.
The report on the MFC Astana was made by Amina Turgulova, Advisor to the Managing Director of the International Financial Center "Astana". The Center on its platform brings together investors who are able to meet the financial needs of the markets of the EAEC and Central Asian states, and provides a wide range of currency and financial services. And in the future, the Center may become a financial hub, connecting the financial markets of the European Union and South-East Asia. Special attention was paid to the Fintech platform and the Green Finance Center.
In her speech Ekaterina Trofimova, Head of Financial Institutions Services in Russia and CIS, Partner at Deloitte (UK), presented the main points of the global report on digital maturity of the banking sector. In the conditions of quarantine restrictions digital technologies have become especially in demand, with their help banks have become more efficient. Russian banks were among the top ten countries in terms of digitalization of banking operations.
The discussion continued with a speech by Denis Shulakov, First Vice-President and Head of the Capital Market Block of Gazprombank JSC. In his speech he raised the issues of expanding the opportunities for cooperation in capital markets to finance international projects in national currencies. Stronger integration in the Eurasia region will facilitate the development of local capital markets, strengthening the interaction between the countries. This process will be an engine for the transition to settlement in national currencies without the use of "external" currencies, which will create an opportunity to increase trade turnover and ensure economic growth. The basis for this is cooperation in capital markets and the issuance of bonds in national currencies in partner countries' markets. The success of the placement of the bonds of Belarus and Kazakhstan in the Russian market will intensify the involvement of other states - Russia's neighbors and trading partners in this process. As a result, a sequence of possible entries of foreign issuers into the Russian market from the EAEC, CIS, SCO and BRICS countries is being built.
In his final speech Nikolay Gushchin, Director of the International Corporate Business Development Department of Sberbank PJSC, raised the issues of currency and financial support of cross-border cooperation, which the bank provides to its clients. The report gives an overview of products based on the latest financial technologies.