The economy of each country is similar to the economy of managing any average family. The principles of forming the budget revenues (taxes, state duties, etc.) and expenditures (social payments, subsidies for certain areas of the economy, etc.) are identical to the family’s financial calculations. If money appears above the expense item, they try to save it, while talking about the reserve. Also in the state structure: if revenues are higher than expenses, then a reserve or reserve is formed. Such a reserve of the country is the gold and foreign exchange reserve of Russia.
Concept and structure
Gold and foreign exchange reserves of Russia - highly liquid assets states controlled by government bodies of state power in Russia.
The structure of gold and foreign exchange reserves of Russia:
- Funds in foreign currency.
- Special Drawing Rights (debt securities).
- Reserve position in the IMF.
- Monetary gold (bullion of precious metals and coins).
Gold and foreign exchange reserves of Russia today are an indicator of the stability of the country's economy, an indicator of solvency.
Why does the state need gold and foreign exchange reserves?
The gold and foreign exchange reserve of Russia, like any other state, helps with a budget deficit to ensure social benefits, stabilize the national currency, pay for the needs of the army, and maintain infrastructure facilities.
Using reserves, the state can influence the world market by purchasing or, conversely, selling reserve volumes of gold and currency. In addition, Russia's gold and foreign exchange reserve allows the state to pursue the policy that is being pursued.
History of gold and foreign exchange reserves of Russia
The history of creating foreign exchange reserves dates back to the 18th century, when Russia opened its first banking houses abroad. States created their reserves in the most reliable asset - gold. But after giving up gold standard and the abolition of circulation of gold coins reserves began to form the dollar equivalent. Why exactly the dollar? By the beginning of the 20th century, the world faced the fact that it was the United States that had the most significant gold reserves and could provide gold for every dollar issued by the state.
The dollar was recognized as world currency and all major deals sales began to be made with this currency.
Troubles for the dollar came in the early 70s, when the world learned that the gold of the US Central Bank is no longer enough to provide every printed banknote. Since then, the euro and other national money began to act as a reserve currency.
Russia's reserves in 2014 underwent significant expenses. Then, only the Central Bank's sale of dollar savings amounted to more than 76 billion USD, and the euro - about 5.5 billion. Most of the funds were spent on maintaining the ruble and stabilizing the economy.
The maximum value of the gold reserves of Russia reached in 2008, they amounted to 598.1 billion USD. The Central Bank of Russia recorded a minimum of this indicator in April 1999, and it amounted to 10.7 billion USD.
Which countries are leaders among holders of foreign exchange reserves?
The five leaders are headed by China, whose gold and foreign exchange reserve as of March 2015 is $ 3,730 billion. Further in the following order:
- Japan (1242.9 billion USD);
- Saudi Arabia (686.43 billion USD);
- Switzerland (560.56 billion USD);
- Republic of China (Taiwan) (USD 418.9 billion).
Russia occupies the 8th position. Gold and foreign exchange reserves of Russia today amount to 358.2 billion USD.
Where is stored gold reserve of Russia?
Russia's foreign exchange reserves are kept in Moscow. This is a very real address: Moscow, st. Truth, Central repository of the Central Bank of Russia. The guarantor of the welfare of the Russian people is stored in standard bars of 10-14 kilograms, covering an area of more than a thousand square meters. Ingots are stored in 6 thousand baskets. But in addition to gold, the Central Vault has a stock of banknotes in case of emergency.
Another part of the gold and foreign exchange reserve of Russia is placed in the banks of St. Petersburg and Yekaterinburg.
Different countries have different models for managing foreign exchange reserves, but the general principles remain unchanged.
Dynamics of gold and foreign exchange reserves of Russia
Over the course of two years, quantitative indicators of Russia's reserves have tended to decrease. In April 2015, these figures reached a minimum of 350 billion USD over the period since the summer of 2007. According to experts, this means that Russia has not yet found the proper methodology for adapting to lower international prices for oil and petroleum products. In addition, the Russian economy continues to be in a fever.
However, in May, good news came from the Central Bank about the increase in gold and foreign exchange savings to the level of 362.3 billion USD.
It is difficult to create a clear and predicted picture of what awaits our reserves tomorrow or the day after tomorrow. Back in November-December 2014, everything was very bad: production indicators, inflation, the fall of the ruble and, as a result, a decrease in the country's foreign exchange reserves. The current situation is encouraging. Yes, the pace of economic development is declining, but the rate of inflation is also declining. Fragile, but the ruble is becoming more stable against the dollar, there are tendencies of stabilization and growth of the country's foreign exchange reserve.
Restructuring dollar reserves
Restructuring dollar reserves in the direction of their reduction is another area of work of the Central Bank of Russia in relation to its gold and foreign exchange reserves. Until recently, a significant part of them was represented by US Treasury bonds (about 100 billion USD). In 2014, the Central Bank reduced this component of the country's savings by 40%. Now, according to the report of the American Ministry of Finance, published on its website, Russia's contribution to American securities amounted to 66 billion USD. With this indicator in mind, Russia ranks 22nd among other countries of the world.
And since March 2015, Russia began to buy gold again. In the spring, the Central Bank of Russia bought about 30 tons of this metal. And now, as of April 1, 2015, the Central Bank’s vault contains 1,238 tons of gold. The dollar value of this metal amounted to 47.3 billion USD.
And Russia continues to get rid of US government bonds. The same report by the US Treasury Department mentions that only in December of the previous year, Russia realized by selling US securities in the amount of 22 billion USD.
Over the year, having reduced the content of treasury notes in its assets by 38%, the country moved from 11th place to 15th among American lenders.
The volume of gold and foreign exchange reserves is crucial for the country's economy. The presence of reserves is a “life buoy” that will give aesthetic pleasure if the swimmer is able to swim, and will save if the swimmer drowns. Russia's foreign exchange reserve is a reduction of risk for the state in times of crisis and a flexible financial policy for a favorable period of the Russian economy. Moreover, once thanks to the Stabilization Fund and the accumulated reserves, the country managed to overcome the crisis without acute losses.
