CENTRAL BANK BACKS DOWN.

Russia’s Central Bank (CBR) has abandoned its threat to appeal to the courts the Russian government demand that it hand over 5 trillion rubles of its profits to help cover Yeltsin’s pre-election spending promises. CBR chairman Sergei Dubinin is said to have been angered less by the loss of the money than by what he saw as the "improper" manner in which the transfer was demanded. Nezavisimaya gazeta reported June 19 that in the past the CBR had frequently transferred money to the treasury to meet government needs but that Dubinin felt the government’s latest demand violated a "gentleman’s agreement" between it and the CBR. (Nezavisimaya gazeta, June 19) The same newspaper wrote on June 15 that the real problem was that Russia so far lacks appropriate legislation regulating the transfer of CBR profits to the federal budget, and that in its absence the CBR was trying to claim more independence than the Federal Reserve or Germany’s Central Bank. The CBR is also reported to be about to back down on the move it took in reaction to the government’s demand, when it increased commercial bank reserve requirements against 30-day deposits to 20 percent. This increase, which the CBR said was essential to curb inflation, set off a storm of protest among Russia’s 2,000 commercial banks. It also reportedly caused alarm among IMF officials, who warned that it could provoke a severe crisis in the banking sector. (Itar-Tass, June 20)

Lithuania Amends Constitution to Allow Land Sales.