President of Russia Dmitry Medvedev: Good afternoon!
Our agenda for today contains a discussion about the prospects for further developing the country's economy and basic approaches to establishing an international financial centre in Russia. This topic is not a new one. We started talking about it long ago. And despite the fact that this is not the easiest period for international financial markets, this task will not be removed from our agenda; on the contrary, it has become even more urgent.
Its involvement in global capital flows is already having very serious consequences on the Russian financial market. And obviously, the effects of the financial crisis that began last summer and is still ongoing, have affected our market, as they have most other national markets. Moreover, higher inflation, problems with cash flow and liquidity have led us to question the leadership of traditional financial centres and their ability to resolve the situation. I talked about this at the forum in St Petersburg and elsewhere as well.
You know that despite this, over the past six years our economy has remained stable, maintained macroeconomic stability, and demonstrates a high rate of GDP growth. Last year this growth amounted to more than eight per cent, this year we expect about eight per cent as well. That's all very good. During this time the Russian stock market and the country’s sovereign rating grew, the banking system became stronger, and most sectors of the economy received new investments. Among Russia’s competitive advantages, we must, of course, include its convenient geographical position and the consistent diversification of its economic structures, as well as its close, multifaceted relationships with most leading countries, both developed countries and those with economies in transition.
All these factors have made and continue to make Russia naturally attractive both for CIS states and other states, and, naturally, this allows us to conclude that an international financial centre located in our country could potentially become a major international financial platform in region. One that in the future could compete successfully in global financial markets. In addition, something that for us is no less important and, in the current situation, perhaps even more important: such a centre will modernise the entire financial infrastructure of our country and become a means for attracting additional resources to the country and the economy. And not only foreign resources but also Russian ones.
Establishing a large and modern centre in Russia, capable of generating more balanced, innovation-based economic growth, is something we have repeatedly talked about. It will create the appropriate conditions for the transformation of domestic savings into investments. Market infrastructure and market instruments will thus improve their performance. Creating a new centre should also act as a real contribution to deepening our economic integration with CIS countries and other states.
But there are obvious problems. We should remember that an open capital market, as we are all now acutely aware, brings with it a lot of risks and the likelihood of an unbalanced inflow or outflow of funds can cause problems with banking liquidity and inflationary risk which, in turn, could overheat the economy.
Soon the government cabinet should adopt a strategy for the development of the financial market. It is obvious that this strategy should oversee a qualitative improvement to the domestic financial system. I believe that these measures should be approved as soon as possible and they should contribute to enhancing the attractiveness of the Russian financial market.
In general, the situation in Russia remains quite normal. We understand that we continue to have a budgetary surplus and the economy demonstrates, as I just said, very good growth rates. And I talked about this yesterday when we discussed the situation in the stock market. But the cabinet and the Central Bank must do everything necessary for attracting additional flows into our financial markets. This is quite clear today and it absolutely needs to be done.
I am sure that the situation that exists in the stock market is a temporary phenomenon that obviously does not reflect the objective state of the economy. The Russian stock market remains very attractive for investments, and serious investors understand this. For that reason we need to improve our management of the market. Now I will set out a few main aspects of our work to establish an international financial centre.
First. Already by 2008–2009 we need to adopt a full package of laws, other documents, regulations, which will be aimed at modernising the infrastructure of our financial markets and enhancing the instruments that are used there, including legislation on exchanges, on clearing services, and on a central depository. Securities of foreign issuers should also have direct access to the stock market. A wide range of traded assets must make the centre truly beneficial for both Russian and foreign participants. And conducting operations through advanced technology should become more reliable and cheaper.
Once again I stress that the centre should provide easy access to transactions. This implies minimal registration and approval procedures for both issuers and investors, as well as for financial institutions.
Another special aspect, a fundamental one, is the special tax regime in financial markets. It must be also competitive and, therefore, attractive to foreign participants.
The second area of activity relates to ensuring the transparency of markets while protecting them from insider leaks and the manipulation of prices. The development of markets requires the improvement of corporate governance — this is a constant challenge — and the better protection of property rights in Russia. And, of course, we must continue to work to improve the overall financial literacy of our people, build up a positive general attitude to financial institutions and to existing procedures.
The third task consists in the development of the business environment. This includes creating a convenient transport and information infrastructure, simplifying visa rules and customs regimes and — in certain situations — rules relating to property rights. These are the guarantees which all investors require and, of course, Russia is no exception to this rule.
Another problem that is obvious to all, especially in situations where difficulties occur, relates to staffing. Training remains a very serious challenge both for our economy as a whole and for the financial market in particular.
In conclusion, I would like to point out that the scale of this challenge requires coordinated work. Only this can allow Russia to create a full-value financial centre in the next few years. I have no doubt that this will come about. And we will do everything so that the Moscow financial centre assumes its rightful place among the major international financial centres.
That is all I wanted to say at the beginning. Let us move on to our discussion.