CORONAVIRUS MADE THE CENTRAL BANK OF RUSSIA AGREE FOR TEMPORARY FLEXIBILITIES

The possibility of using a reduced risk coefficient for companies, engaged in the production of medicines and medical equipment will be an additional anti-crisis measure. Now this rate can reach up to 70%, but only if the credit requirements for such organizations are denominated in rubles, and not in the foreign currencies.

Existing premiums that banks add to risk factors for pharmaceutical companies and manufacturers of medical equipment for foreign currency obligations, will now be reduced to zero.

With such exemptions, the Central Bank responds to the consequences of the coronavirus epidemic, which has seriously affected all areas of the economy, but especially the area of tourism and transport.

How can the CB’s anti-crisis response measures help maintain the banking sector liquidity? According to the experts, the announced concessions are a necessary measure in case of a possible tightening of the approach of commercial banks to individual sectors of the economy. In current situation, it is important that the companies, that are most affected by the liquidity risks, are not found to be insolvent.

Such a relief from the state financial regulator may turn out to be a kind of a magic wand for a stable company that cannot restructure its debt to a financial institution, because the lender bank has liquidity problems. 

Experts agree that the current situation is fundamentally different from what was happening during the crisis of 2014. Then it was important to put the market in a free-swimming mode and get away from regular interventions. Now the Central Bank wants the banks to be able to get rid of the need to sharply increase their reserves due to the growth of corresponding deductions. The Bank of Russia promised that the measures taken are not final and that in case of a possible complication of the situation, the regulator may take other anti-crisis measures.

Efforts to control the COVID-19 infection, caused by the previously unexplored beta-coronavirus SARS-CoV-2, are currently focused on by many states. The spread of the disease in more than 100 countries of the world has forced WHO to recognize the emergency situation. Most countries received the equipment needed for laboratory research.

For today, the highest mortality from the virus was recorded in Italy, where the disease led to the death of every 20th patient.

It is logical that the sooner the information about the discovery of effective means of combating coronavirus appears in the media, the greater the likelihood of ending the fever that has swept the global financial market.