President of Russia Dmitry Medvedev: Good afternoon, colleagues.
Last week we met with at least some of those present here to examine the investment climate [at meeting on investment climate in Russia on February 2, 2010]. Today at this meeting of the Presidential Council for Financial Market Development — and this is the third such meeting, if my count is correct — we will be talking about what has been done over the past year to improve the regulation of the financial market in our country and what we should focus on in the short term.
I established the Council in October 2008. Its priorities include promoting Russia’s Financial Market Development Strategy through to 2020, as well as plans for creating an international financial centre in Russia.
As you know, the actions that we have already taken have changed the tax system, toughened requirements for evaluating the equity by those involved in the market, increased administrative and criminal liability for violations and manipulation of financial markets, and resolved a number of technical issues.
This is of course only part of what was planned for 2009. We have not as yet enacted some important, fundamental market regulation laws on insider trading, stock exchanges, clearing houses, and the central depository. Incidentally, I would like to hear why these laws have not yet been adopted.
At the same time there have been certain concerns expressed by various financial market players, by observers, and even by entities that may seem to be totally detached from the market, such as the media.
I recently met with chief executives of media outlets, their chief editors: they are very concerned about the law on insider trading and believe that it will be a mortal blow for the media, that it will deprive them of their life’s blood and compel them to be held accountable for things that they haven’t done. I think that this assessment is somewhat emotional and exaggerated; nonetheless, this issue needs to be clarified. I am instructing the Government Cabinet, Mr Alexei Kudrin [Minister of Finance], and, of course, our regulatory service [Federal Service for Financial Markets] to attend to this matter, to meet with and listen to the media’s position on this issue. Perhaps in the final version of the law on insider information, and in cooperation with the State Duma of course, they could make some suggestions to improve regulations in this area.
I would also like to stress that this lack of adequate tools is naturally the cause of unnecessary fears for both Russian and foreign investors. It is also an obstacle to the launch of long-term and large-scale projects, and in general is slowing down our development and reducing the competitiveness of our economy and our financial market in the global economy and the global market.
Let me say a few words about what has to be done to redress the situation. First, we must finalize the documents designed to implement the decisions of the Financial Stability Board [established at the G20 summit in April 2009]. In addition to the adoption of the laws I mentioned, we need to finalize the documents within the framework of the Financial Stability Board. We have wanted to be a member of this esteemed organisation for a long time. Now they have given us the green light and we have to fulfill our obligations.
But allow me to point out that our work within this Board should not be reduced merely to copying international standards. First, as we all know, these standards are far from perfect. We are currently working together to create the contours of a new financial architecture, a global financial architecture. And, secondly, we in Russia have to create a financial system that is consistent with the interests of the domestic financial market and our national businesses. Of course we must actively make available to our partners our own experience in this field.
Another subject: we should continue to establish the legal basis for an international financial centre in Russia. This problem has not disappeared from our agenda – it is as urgent as ever. Of course we had to spend the whole of last year dealing with other challenges. Unfavorable economic conditions in various financial centres of the world forced us to change our plans, but, on the other hand, this gave us the opportunity to look at current global market risks differently, to examine the array of available financial tools and assess the markets that already exist, their merits and their shortcomings, and to reflect on what place in these markets the Russian Federation can take.
In this context, our objective is to promote long-term domestic and foreign investments, not just flows of speculative capital, though there will necessarily be both. Of course long-term investment is always more valuable for us.
Our third task is to re-examine the most vulnerable elements, the most vulnerable features of our financial market and establish a comprehensive action plan for its development in the current year and in the medium term.
An important requirement toward the financial market is that it matches the national development priorities: namely, it should facilitate the flow of innovation and the modernisation of the economy in general, and it should boost economic efficiency.
And, finally, the last thing. Our financial market must promote as much cooperation as possible within the framework of the common customs space of Russia, Belarus and Kazakhstan, and encourage economic integration within the CIS and other integration associations in which Russia participates.
That’s all I wanted to say for now.