Moscow to be in the Center of Global Finance

July 18, 2008

Russia's Ruble continues to appreciate against the Dollar and Euro

Russia’s Union of Industrialists and Entrepreneurs is elaborating an action plan to create an international financial center in the country. Its management board will focus on the draft documents at the nearest sitting. Although the Economic Development Ministry that is to submit its own concept by August finds some proposals vital, it says they don’t directly relate to the subject-matter, i.e. the center’s establishment. The list of the Union integrates ideas ranging from establishing a gas OPEC to lowering the profit tax.

The Banking Commission of Russia’s Union of Industrialists and Entrepreneurs approved yesterday two documents aimed at setting up an international financial center in Russia. Vladimir Putin and then Dmitry Medvedev have been advocating its creation since the second half of 2007. Economic Development Minister Elvira Nabiullina will submit to the government by August 1, 2008 the concept for setting up this center by 2020.

The concept of Russia’s Union of Industrialists and Entrepreneurs spells out a number of mid-term and immediate actions. In interpretation of the Union, the center could be created provided the ruble turns into a global reserve currency. One of its aims will be investing the money of sovereign funds into the instruments circulating in Russia and it will deal with the international transactions related to the electric power and food (mostly grain) industries.

In essence, the concept of the Union promotes ideas popular in the Economic Development Ministry in time of German Gref and currently discussed by top bureaucrats of the country, including Vice Premier Igor Sechin. The matters at stake are transferring to ruble-settlement the export deals of Russia’s extraction companies and developing international commodity exchanges in Russia with the buyout of key trading floors in the EU (Germany, Sweden), Central Asia (Kazakhstan), South-East Asia (Vietnam) but without competing with the New York and London exchanges.

People in the Economic Development Ministry find the proposals of Russia’s entrepreneurs vital but specify that quite a few of them “have nothing to do with establishing the center in Russia” and the implementation potential of some of them is very low, and therefore, the ministry will hardly add those proposals to the concept.