The monetary policy of the Bank of Russia is balanced and flexible, the First Deputy Chairman of the Central Bank of Russia Alexei Simanovsky said, when asked about the refinancing rate during the annual meeting with bankers in mid-February.

Simanovsky noted that the refinancing rate is a value of reference. Since the refinancing rate now stands at 6.5 percent, the rate of raising funds from the Central Bank is lower than the inflation rate of 7.1 percent.

The decisions of the Central Bank’s monetary policy are made with reference to three major criteria, which include the state of the Russian economy, inflation expectations, and the impact of the global economy. Based on its assessment of the various factors, the Bank of Russia makes a decision on the refinancing rate.

Mr. Simanovsky also said at the meeting that the Basel III global regulatory standard on bank capital adequacy will be gradually incorporated into requirements for Russian banks, with no shocks and surprises for credit institutions. Changes would primarily deal with internal methods of calculating reserves and increased capitalization requirements, noted Alexei Simanovsky. Opaque activities would be more risky than transparent activities. According to Mr. Simanovsky, the Central Bank at this time is conducting discussions with the banking community to ensure compliance with the new standard in the future.