Russia's Finance Ministry has offered to place 160 billion rubles ($5.4 billion) on domestic banks' deposit accounts to avert a possible liquidity crunch in the wake of the spreading global market turmoil, Vedomosti business paper reported on Thursday.
"This is to take care of market stability," a Russian government official told the paper.
Russia's Finance Ministry and Central Bank have taken precautionary measures due to the considerable amount of liquidity which has left the domestic market through the purchase of foreign exchange, VTB Capital Nikolai Petrov told the paper.
The move follows Russian Prime Minister Vladimir Putin's instruction to carefully monitor liquidity in the banking sector to prevent a repetition of the 2008 financial crisis, the paper said.
Russia's Finance Ministry started placing federal budget funds on domestic banks' deposit accounts in April 2008 as an instrument to help them replenish liquidity and survive the crisis. The Finance Ministry offered a record 600 billion rubles on September 22, 2008, of which banks took over 330 billion rubles, the paper said
The Russian stock market joined the panic on international trading floors on Friday when ratings agency S&P cut the U.S. top rating by one notch to AA-plus over concerns of America's growing budget deficit.
Late on Tuesday, the U.S. Federal Reserve System announced a decision to keep its key rate unchanged at close to zero for two more years, which led to slight stabilization on the stock markets.