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Legal Status and Functions of the Bank of Russia

The Constitution of the Russian Federation, Article 75

Federal Law on the Central Bank of the Russian Federation (Bank of Russia) 01.04.2019

Federal Law on banks and banking activities 01.04.2019

Legal Status

Article 75 of the Constitution of the Russian Federation establishes a special legal status of the Bank of Russia, gives it the exclusive right to issue currency (Part 1) and protect the ruble and ensure its stability, which is the main function of the Bank of Russia (Part 2). The status, purposes, functions and powers of the Bank of Russia are also spelled out in Federal Law No. 86-FZ, dated July 10, 2002, ‘On the Central Bank of the Russian Federation (Bank of Russia)’, and other federal laws.

According to Article 3 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, the goals of the Bank of Russia are to protect the ruble and ensure its stability, promote the development and strengthen the Russian banking system, ensure the stability and development of the national payment system, develop the financial market of the Russian Federation and ensure its stability.

A key element of the legal status of the Bank of Russia is its independence, which implies, above all, that the Bank of Russia is a special public and legal institution that has the exclusive right to issue currency and organise its circulation. The Bank of Russia is not a body of state power, but its powers are, in effect, the functions of a body of state power, because their implementation implies the use of state compulsion. The Bank of Russia performs the functions and exercises the powers stipulated by the Constitution of the Russian Federation and the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ independently from the federal bodies of state power, regional authorities and local governments. Its independent status is codified in Article 75 of the Constitution of the Russian Federation and Article 1 and Article 2 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.

The legislative powers of the Bank of Russia imply its exclusive right to issue regulations binding on the federal bodies of state power, regional authorities, local governments and all legal entities and private individuals on matters placed within its competence by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and other federal laws. According to Article 104 of the Constitution of the Russian Federation, the Bank of Russia does not have the power to initiate legislation, but it is involved in the law-making process not only by virtue of issuing its own regulations, but also owing to the fact that the drafts of federal laws and statutory acts of federal bodies of executive power concerning the performance by the Bank of Russia of its functions must be submitted to the Bank of Russia for consideration and approval.

The Bank of Russia is a legal entity. Its authorised capital and other property are federal property. Nevertheless, the Bank of Russia has both proprietary and financial independence. It exercises its powers to own, use and manage its property, including international reserves, in compliance with the purposes and according to the procedure established by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’. Bank of Russia property may not be seized or encumbered without its consent, unless the federal law stipulates otherwise. The financial independence of the Bank of Russia implies that it covers its expenses from its own incomes. The Bank of Russia may defend its interests in court, including international courts, the courts of foreign states and courts of arbitration.

The state is not liable for the Bank of Russia obligations, just as the Bank of Russia is not liable for the state obligations, unless they have assumed such obligations or unless federal laws stipulate otherwise. The Bank of Russia is not liable for the obligations of credit institutions and non-credit financial institutions, while the credit institutions and non-credit financial institutions are not liable for the obligations of the Bank of Russia, except the cases in which the Bank of Russia or credit institutions and non-credit financial institutions assume such obligations.

The Bank of Russia is accountable to the State Duma of the Federal Assembly of the Russian Federation (hereinafter referred to as the State Duma), which appoints and dismisses the Bank of Russia Governor (on the proposal of the President of the Russian Federation) and members of the Bank of Russia Board of Directors (on the proposal of the Bank of Russia Governor, agreed with the President of the Russian Federation), sends and recalls its representatives in the National Financial Board within its quota and considers the guidelines for the single state monetary policy and Bank of Russia annual report and takes decisions on them. On the proposal of the National Financial Board, the State Duma may take the decision to get the Audit Chamber of the Russian Federation to audit the financial and economic activities of the Bank of Russia and its divisions and establishments. In addition, the State Duma holds parliamentary hearings on the Bank of Russia activities with the participation of its representatives and hears the reports by the Bank of Russia Governor about the Bank of Russia activities in the course of presenting the annual report and guidelines for the single state monetary policy.

Bank of Russia Functions

The Bank of Russia performs its functions in compliance with the Constitution of the Russian Federation, Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and other federal laws. According to Article 75 of the Constitution of the Russian Federation, the principal function of the Bank of Russia is to protect the ruble and ensure its stability. The Bank of Russia is the sole issuer of currency. Pursuant to Article 4 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, the Bank of Russia performs the following functions:

— in collaboration with the Government of the Russian Federation it elaborates and pursues a single state monetary policy;

— in collaboration with the Government of the Russian Federation it elaborates and pursues a policy of developing and ensuring the stable functioning of the financial market of the Russian Federation;

— it is the sole issuer of cash and it organises cash circulation;

— it approves the graphic symbol of the ruble as the currency sign;

— it is the creditor of last resort for credit institutions and it organises the system employed to refinance them;

— it sets the settlement rules in the Russian Federation;

— it exercises supervision and oversight of the national payment system;

— it sets the rules for conducting banking operations;

— it services budget accounts of all levels of the budget system of the Russian Federation unless federal laws stipulate otherwise by effecting settlements on behalf of the authorised bodies of executive power and government extra-budgetary funds, which are assigned the task of organising the execution of and performing the actual execution of the budgets;

— it efficiently manages the Bank of Russia’s international reserves;

— it makes decisions on the state registration of credit institutions, issues banking licences to credit institutions and suspends and revokes them;

— it makes decisions on the state registration of non-governmental pension funds;

— it supervises the activities of credit institutions and banking groups;

— it exercises regulation, control and supervision over the activities of non-credit financial institutions in compliance with federal laws;

— it registers securities issues, securities prospectuses and reports on the results of securities issues;

— it exercises control and supervision over compliance by issuers with the requirements of Russian Federation legislation on joint-stock companies and securities;

— it exercises regulation, control and supervision over corporate governance in joint-stock companies;

— it conducts on its own behalf or on behalf of the Government of the Russian Federation all types of banking operations and other transactions necessary for the performance of Bank of Russia functions;

— it organises and exercises foreign exchange regulation and foreign exchange control pursuant to the legislation of the Russian Federation;

— it sets the procedure for effecting settlements with international organisations, foreign states and legal entities and private individuals;

— it approves sectoral accounting standards for credit institutions, the Bank of Russia, and non-bank financial institutions, the chart of accounts for credit institutions and the procedure for its application, the chart of accounts for the Bank of Russia and the procedure for its application;

— it approves the chart of accounts for non-bank financial institutions and the procedure for its application;

— it sets and publishes the official exchange rates of foreign currencies against the ruble;

— it takes part in making a forecast of the balance of payments of the Russian Federation;

— it takes part in developing a methodology for compiling the financial account of the Russian Federation within the national account system and organises the compilation of the financial account of the Russian Federation;

— it compiles the balance of payments of the Russian Federation, international investment position of the Russian Federation, statistical data on external trade of the Russian Federation in services, external debt of the Russian Federation, international reserves of the Russian Federation, direct investment in the Russian Federation and direct investment of the Russian Federation abroad;

— in order to compile the balance of payments of the Russian Federation, international investment position of the Russian Federation, statistical data on external trade of the Russian Federation in services, external debt of the Russian Federation, international reserves of the Russian Federation, direct investment in the Russian Federation and direct investment of the Russian Federation abroad it develops on its own and approves a statistical methodology, a list of respondents, the procedure and forms for them to provide primary statistical data, including the forms of federal statistical observation;

— it analyses and makes forecasts for the state of the economy of the Russian Federation and publishes the corresponding materials and statistical data;

— it effects Bank of Russia payments on household deposits with bankrupt banks not covered by the mandatory deposit insurance system in the cases stipulated and according to the procedure established by the federal law;

— it is the depository of the IMF funds in the Russian currency and it conducts operations and transactions stipulated by the Articles of Agreement of the International Monetary Fund and the agreements with the International Monetary Fund;

— it exercises control over compliance with the requirements of Russian Federation legislation on countering the illegal use of insider information and market manipulation;

— it protects the rights and legitimate interests of shareholders and investors in the financial markets, insurers, insured persons, and beneficiaries recognised as such in accordance with insurance legislation, including insured persons under compulsory pension insurance, depositors and participants in a non-governmental pension fund under non-governmental pension insurance;

— it organises the provision of electronic financial messaging services;

— it performs other functions in compliance with federal laws.

Last updated on March 5, 2019.

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