It supports a minimum capital requirement of less
than $5 million. Government sources have gone as high as $200 million.
The government retaliates with thinly-veiled threats in the form of
inane proposals to replace the Bank with newly-created "independent"
institutions.
Viktor Gerashchenko - the current, old-school, Governor - is set to
leave on September 2002. He will likely be replaced by someone more
Kremlin-friendly. As long as the Kreml is the bastion of reform, these
are good news. But a weak Central Bank will remove one of the last
checks and balances in Russia. Moreover, a hasty process of
consolidation coupled with draconian regulation may decimate private
sector Russian banking for good. This, perhaps, is what the Kremlin
wants. After all, he who controls the purse strings - rules Russia.
II. The Stock Exchange
The theory of financial markets calls for robust capital markets where
banks are lacking and dysfunctional. Equity financing and corporate
debt outstrip bank lending as sources of corporate finance even in the
West.
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