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    RUSSIAN BANKS MAY INCREASE THEIR INVESTMENT POTENTIAL

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    ZURICH, February 2, 2004. / RIA Novosti correspondent Yekaterina Andrianova /. In the opinion of Garegin Tosunyan, president of the Russian Banks' Association, a reduction of deductions to the Compulsory Reserve Fund will increase the Russian banks' investment potential. Tosunyan said this to RIA Novosti in Zurich, where he takes part in the Russian economic and financial forum.

    In his words, the reduction of deductions to this fund will allow the banks to channel additional funds into long-term investments.

    The Compulsory Reserve Fund (FOR) is formed from commercial banks' funds which they have to keep in the Central Bank to secure some of the their operations. Moreover, it is generally believed that these reserve deductions help maintain money supply in circulation at a certain level and curb inflation. At present, the Russian banks transfer from 7 to 10% of attracted deposits to FOR. In EU countries, the banks transfer 2%, and in the United States - from 0 to 5% of the attracted deposits.

    In Tosunyan's words, Russian banks managed to persuade the Central Bank not to link directly the country's inflation level with the size of the reserve fund. The bankers are working for a reduction of their deductions to FOR at least by 1-2% at the first stage.

    Previously, the Central Bank's managers confirmed their readiness to reduce the size of the Compulsory Reserve Fund as early as the first quarter of this year, but they declined to specify the figures.

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