Publication: Monitor Volume: 2 Issue: 111

The Association of Russian Banks (ARB), which represents Russia’s commercial banks, will protest Monday’s decision by the Central Bank of Russia to raise the level of reserves which lending institutions are required to maintain. According to Vladimir Gusinsky, chairman of the MOST banking group and ARB vice-president, the move will be a severe blow to the commercial banks. (Interfax, June 11) Central Bank chairman Sergei Dubinin stressed that the Bank was reacting to last week’s law forcing it to hand over five trillion rubles to help cover the federal budget deficit. The deficit, already large, has been put under upward pressure by President Yeltsin’s campaign promises. Dubinin said the Bank had to act to preserve financial stability, prevent a surge in inflation, and observe Russia’s obligations to international organizations such as the IMF. He recalled that the Central Bank lowered its requirements as recently as May 1, and regretted that it was now being obliged to make a U-turn. The Central Bank estimates that its latest move will remove some 2-3 trillion rubles from circulation. (Kommersant-daily, June 11)

Wooing Defense Workers.