/ world today news/ If the Central Bank is something different from the state, then what is it?
I have already written more than once that the Central Bank of the Russian Federation is playing against Russia in the undeclared war of the collective West.
First, she gave the West a gift of astronomical proportions – she provided for freezing (for confiscation) half of the international reserves of the Russian Federation – at least 300 billion dollars.
Second , in the early days of the sanctions war, the Central Bank set an exorbitant prime rate (20 percent). Although it is 7.5 percent today, it still makes credit prohibitively expensive for businesses in the real sector of the economy, capable of ruining those businesses. On October 2, the moratorium on bankruptcy ceased to operate. Thousands of enterprises will go under the “guillotine”, many of them because of unpaid debts on usurious loans.
Third The central bank continues to severely limit the money supply under the pretext of fighting inflation (the indicator of monetization of the economy remains at an unacceptably low level – the value of the monetary aggregate M2 is less than 50 percent of GDP, while in China it is more than 200%, in Japan – almost 200%).
Fourth , contrary to presidential decrees of February 28 and March 1, which impose strict restrictions on foreign exchange transactions and cross-border movement of capital, the Bank of Russia quietly but persistently torpedoes these decrees. It reinstated currency liberalization, facilitating capital outflows.
The Bank of Russia has just published data on the country’s balance of payments for the third quarter. Net capital outflows in July-September amounted to $49.6 billion, and according to the results of the three quarters of the year, this figure is $195.2 billion, I would not be surprised if the figure reaches $250 billion by the end of the year. The Russian Federation in its thirty-year history has not even come close to today’s “records”.
On October 18, the Bank of Russia once again demonstrated that it is not playing on Russia’s side. I am referring to the resonant speech of the Deputy Chairman of the Bank of Russia Alexei Zabotkin in the Federation Council. And here’s what the clerk said.
At present, acquisition of precious metals by the Central Bank to replenish international reserves is not advisable. Making such purchases can increase the volume of the money supply, and this will prevent the Bank of Russia from engaging in “inflation targeting” and create an additional impetus for the growth of the money supply.
This statement was a response to the proposal of the head of the Union of Gold Producers Sergey Kashuba to support the gold mining industry by buying up all the precious metals that were not sold on the market.
The central bank did not favor the local gold mining companies in the previous two years as well. As of April 1, 2020, the Bank of Russia has stopped buying precious metals mined in the country. And this moratorium lasted almost two years. Local gold prospectors were forced to sell the precious metal abroad. In two incomplete years, 630 tons of gold went there, almost 90% of the production of the precious metal.
And this is against the backdrop of ever-increasing demand for gold from many central banks. According to the World Gold Council, last year alone, net purchases (purchases minus sales) of gold by central banks amounted to 463 tonnes. For the thirteenth year now, central banks have been net buyers of the precious metal on the global market (buying exceeds selling).
In anticipation of the inevitable collapse of the global dollar system, the appetite for gold is clearly growing, and not just among central banks. Most of the 630 tons of Russian gold mined and sold abroad went to London.
With the start of the sanctions war, Russian prospectors have generally found themselves between a rock and a hard place. Washington, London, Brussels, Tokyo introduced the so-called “gold sanctions”, which make it difficult, even impossible, to export the precious metal from Russia.
It seems that in this situation the Bank of Russia had to come to the aid of the gold diggers. In the spring, it appeared to have resumed buying the precious metal from Russian miners. However, he did it slowly, the purchases were insignificant.
In March, the Central Bank announced that it will buy gold from credit institutions at a fixed price on the domestic market – 5,000 rubles for 1 gram (the price is quite decent for miners). But already at the beginning of April, the Bank of Russia abandoned its guarantee and switched to purchases at a contract price; purchase prices became obscenely low.
The Bank of Russia has not said directly whether it is continuing to buy gold. In addition, in the spring, it completely closed information on the gold reserve and gold operations. However, on October 18, the same Zabotkin revealed “military secret”, admitting that purchases were made only in March and April. It will soon be six months since the Bank of Russia has not bought a single ounce of the precious metal from Russian miners.
As you can see, the freezing of paper currencies of the Central Bank of the Russian Federation did not teach her anything. The Central Bank and the Ministry of Finance are looking for a replacement for the “toxic” currencies. They are trying to “move the arrow” to the Chinese yuan, the Hong Kong dollar, the Turkish lira, the Indian rupee, the South African rand and other currencies of “friendly countries”.
However, first, today the issuers of these currencies are friends, but where will they be tomorrow? What are the guarantees?
Second, these are currencies with limited convertibility.
Third, these are the depreciating currencies.
In general, the world of paper (fiat) currencies is close to total collapse. Only gold coins will remain. Those who understand this hoard the precious metal. And the Bank of Russia, I have a feeling, is actually playing along with those hoarding gold by helping them in this process. I wouldn’t be surprised if tomorrow it starts supporting them directly by selling gold from its reserves (about 2,300 tons at the beginning of the year).
The arguments that the Bank of Russia presents to justify its strange gold policy are simply incredible. It turns out that the purchase of gold, according to bank officials, will depreciate the Russian ruble. While everything is exactly the opposite: the ruble spent on the purchase of precious metal will be the strongest. But those rubles that the Bank of Russia prints to buy foreign currency will turn out to be virtual, will turn into empty shells.
I think the Central Bank and the Ministry of Finance are simply afraid of a strong ruble. They need a weak ruble, and gold purchases will prevent that. They want to buy not metal, but foreign currency, according to the recommendations of the “Washington Consensus”, or the requirements of Russia’s geopolitical opponents.
Since the time of Soviet industrialization, gold mining has been considered the currency workshop of the country, receiving the full support of the Soviet party and state leadership. The Bank of Russia defiantly states that it refuses to support the currency workshop.
To the remark of the participants of the meeting in the Federation Council that the Bank of Russia should support gold mining companies, Alexei Zabotkin replied that “targeted support for certain sectors of the economy is not within the powers of the Bank of Russia”.
They say that buying gold from the Central Bank is its right, but not its duty (a subtle hint that the Central Bank is something different from the state). According to her, if the state considers it necessary to increase the gold reserve, it can do so through the Ministry of Finance. The Ministry of Finance is ready to buy gold, but only within the budgeted amounts. And these amounts are very modest.
In March, after the freezing of foreign reserves, the Bank of Russia was at a loss and facing severe sanctions. However, no punishment followed. The Bank of Russia felt it was getting away with it all and resumed operations, purposefully draining gold from Russia and systematically destroying the country’s currency shop.
Translation: ES
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