To the problem of the relative “independence” of the bank of Russia as a mega regulator of domestic financial market

The Central Bank of the Russian Federation (Bank of Russia) dates back its history from XIX century. Then, in 1860, it was established by Alexander II as the State Bank of Russia. He was involved in the financing of the Treasury, conduct of repurchase operations, supported the Nobility and Peasant Land Bank. Over time, the State Bank repeatedly changed its name, but, whatever the name, the Bank's mission has always remained the provision of economic development of the country [10].

Development, growth and stability are the key points, which according to the Constitution, should be based the activity of our main Bank as a mega regulator. This raises a logical question: and whether in fact the policies and activities of the Bank of Russia correspond to conceptual aspects of the basic law of the State?

The Central Bank of the Russian Federation (Bank of Russia), which operates as a lender of a “last resort” for financial institutions as a mega regulator of the domestic financial market, was established on 13 July 1990 and so, it replaced the State Bank of the USSR [10].

As it is known, the Bank of Russia in accordance with Russian law is considered as a relatively independent structure, and its legal nature is defined as a legal entity. Thus, Article 1 of the Federal law No. 86-FL "On the Central Bank of the Russian Federation (Bank of Russia)" runs as follows:

"Functions and powers provided by the Constitution of the Russian Federation and the present Federal law, the Bank of Russia operates independently from other Federal bodies of State power, bodies of State power of subjects of the Russian Federation and bodies of local self-government" [8]. But, if you examine the conceptual provisions and articles of this Federal law more detailed and familiarize with individual articles of the Constitution of the RF, in the context of which the activities of the Bank of Russia are referred, it becomes clear that the independence in accordance with presented interpretations is a quite controversial concept.

If we consider the interaction of the Bank of Russia with the State, we can single out the following features:

• 1)    The Central Bank management in the person of its Chairman and members of the Board of Directors is appointed and dismissed by the State Duma of the Russian Federation.

• 2)    The national financial Board of the Central Bank of the Russian Federation consists of two members of the Federation Council, three members of the

State Duma, three members of the Government of the Russian Federation, as well as the three candidates sent by the President.

• 3)    To engage in any other paid activity, except teaching, scientific or creative is prohibited to the Chairman of the Bank of Russia.

• 4)    The management of the Bank of Russia makes up the annual report on its activities and presents it to the State Duma [9].

• 5)    In 2015, President Vladimir Putin issued a law, pursuant to which in 2015 the Bank of Russia transferred in the state budget 75% of its profit and in 2016 -90% [5,6,7].

In contrast to the above mentioned, it should consider, for example, the following significant counterargument: the Bank of Russia may, at its discretion, to change the value of the key rates on transactions in the financial market. Despite the fact that after the collapse of the USSR and transition to market pricing mechanisms, the value of the key rate in Russia has decreased in comparison with 90s of XX century, however, compared with foreign interest rates, it still remains one of the highest in the world (Table).

Table – Value of key rates of central banks of world leading countries [3]

Such dynamic variation of interest rates presented in the table, in our view, primarily is explained by the fact that by manipulating the level of the key rate the management of the Bank of Russia tries to control rising inflation. It does not take into account that by conducting such monetary policy and such actions the Central Bank of the Russian Federation (Bank of Russia) generally reduces the availability of credits to economic agents, impeding the development of small and medium business, etc. Against this background, the Bank of Japan, for example, entered a negative key interest rate on new deposits that credit institutions will be placed on accounts at the Central Bank of this country. Now instead of transferring to the accounts of the Japanese Central Bank, all of its funds according to the rate -0,100% will be invested in the economy. Such a different approach to economic development is coming from the mega regulators of different countries.

Further analyzing the situation of the direction of monetary regulation, we note that this Federal law "On the Central Bank of the Russian Federation (Bank of Russia)" runs as follows that one of the functions of the Bank of Russia is a monopolistic implementation of cash issues [8]. This formulation is more suitable in the relation to regulatory functions of the Federal Reserve System of the United States. In theory, as noted in the works of some authors, the U.S. Federal reserve is analogous to the Bank of Russia [1,2]. But this issue should be noted a number of distinctive features should be noted in present problem:

• -    FRS consists of 12 commercial banks which in fact do not belong to the state;

• -    form of property of FRS capital is private;

• -    taken decisions on monetary policy must not be approved by the President of the USA or any other from executive and legislative branches of power [9].

As a consequence, in accordance with these distinctive features of regulating the direction of monetary policy of the USA FRS, the scheme of emission of the national currency in the US is simply unique: the Federal Reserve prints dollars and "gives" them to the state in exchange for bonds of the U.S. Government. Then the government buys the same bonds, but with interests. After the abolition of the

Bretton - Woods agreements, the issue of American dollars is conducted without reference to gold, and, in fact, unlimitedly. According to various reports, up to 80% of all printed American dollars are unsecured. They are just artificially "inserted" in the economies of other countries in exchange for real assets [9].

Against this background, the practice of issuing regulation undertaken by the Bank of Russia is fundamentally different. The main method is the emission of a ruble, in accordance with the current legislation in Russia which is based on the monetization of state assets. That is to start issuing its own money the government must first acquire foreign currency, securities, etc. The domestic Central Bank can not start issuing "just simply" without security, and this means that "monopolistic implementation issue of money" is also an incorrect statement. In this connection the question arises: who, what body of emission regulation and what country still monopolized the issue of money and for the whole world?

So, as we see in the light of the foregoing precedents, the Central Bank of the Russian Federation depends not only on the state authorities of the Russian Federation and some other foreign countries. In the situation of recent events of GeoEconomics, when some of the contradictions between States worsened and geopolitical views of our “partners” do not coincide with the views of others, it is impossible to allow the economic monopolization of the world according to most economists. Of course, the leading developing countries understand the complexity of the modern world serious aggravated situation. And measures are gradually taken, because such associations as BRICS (Brazil, Russia, India, China, South Africa) or Eurasian economic Union (post-Soviet countries), created as a response to the challenges of the modern world community. Such powerful emerging blocks can become the new "poles" of the modern world, which are able to compete with the European Union and the United States in future.

Thus, we have in the course of conducted study there was made an attempt to justify the need for fundamental changes in the legal status and legal personality of the Central Bank of the Russian Federation (Bank of Russia), the feasibility of measures for full nationalization of the Bank of Russia, and, as a consequence, the creation of the private emission center becomes one of the most important economic problems for Russia. We believe that the project of emission center should be viewed not only within Russia but also in several partner countries with the possibility of the takeover of new states. And this is the path to the true sovereignty in political, economic, military, cultural and other aspects of opportunistic state policy.