Good afternoon, dear Speaker and fellow colleagues,
There is no denying the fact that the financial sector plays a critical part in the context of our efforts to deliver on the national development agenda. Financial intermediaries and the stock market work to ensure that savings transform into investment, businesses obtain the resources they need for development, and consumers gain the tools to grow their wealth.
It is within our regulator’s mandate to oil the gears of all these mechanisms and make sure the financial sector provides excellent performance. This means that the costs of businesses and consumers related to their financial objectives should go down. And this means, as the Speaker has mentioned, that we should secure the emergence of long-term money.
My deputy, Sergey Shvetsov, is here today to tell you more on our financial market agenda.
In my opening remarks, I would like to expand on a number of key points in our operations as a regulator, which have, in my view, major implications.
It would be fair to say that this year has spurred transformation in the financial sector. Among key developments are accelerated digitalisation, the Bank of Russia’s switch to soft monetary policy, falling interest rates in the economy, pandemic-induced borrowers’ problems and a large volume of restructured loans.
For all its problems and obstacles, the year has laid bare the degree to which financial institutions and banks are prepared for unexpected circumstances. The resilience of banks and other financial institutions, and their so-called ability to adsorb the shocks the epidemic has brought about, suggest that rehabilitation of the Russian financial sector is an accomplished fact.
This is why recent months have seen – despite the difficulties – the financial sector evolving and carrying on with providing support to the economy, as borrowing from banks has been on the rise, and the stock market has been growing at a faster pace.
Our current priority is to strike the right balance between the objectives of supporting economic recovery and long-term projects as part of our national development agenda. It is essential to ensure that a maturing financial market relies on the principles of trust and competition and – this is of paramount importance – the principle of customer interest protection (rather than only on a short-term gain strategy).
You are aware that lending continued this year, unlike in prior times of crisis. More so, we have seen record growth in mortgage lending, which is the point the Speaker has made. For all these welcome developments, our central focus should remain with the real target, which is to make housing more available to people, and not to stage a kind of race for records. Our housing market has indeed a lot of growth potential: it is true that mortgage lending has yet to become as common as it is in many other countries. However, we should bear in mind, first, that mortgage debt has been taking years to accumulate there and, second and most important, the accumulation of this debt should tally with a rise in household incomes. Hence the need to prevent the emergence of a bubble in this market and the real risks this bubble would carry, in order of priority, for people, developers and banks. This sector needs a long-term development plan based on market principles.
I cannot agree more with the Speaker on this subject: the government’s concessional lending programme indeed helped stave off market failure at times of crises. At this point in time however, we are seeing that demand for mortgage loans is in a way increasingly translating into a stampede, leading to unjustified price growth in several regions. Ultimately, developers and banks stand to take advantage of this programme, rather than consumers.
It would do no harm to support them; however, our key objective is the availability of housing. We should focus increasingly on targeted support programmes, which includes the efforts to support the overall supply and demand balance. Let me explain: there are more and more consumers willing to make use of low rates and take out mortgage loans. They could service the debt, but they have no money for the down payment….