Business news

7 Feb 2023

Belarusian central bank plans to enhance efficiency of monetary policy

Pavel Kallaur

MINSK, 7 February (BelTA) - Chairman of the Board of the National Bank Pavel Kallaur delivered a report to the head of state on the planned changes to the Banking Code, BelTA has learned.

"The Banking Code has been updated to improve the legal framework in which the National Bank and banks operate. This step has been due to changes in the macroeconomic environment and national legislation, integration processes in the financial sector and the dynamic development of information technologies in the banking sector," Pavel Kallaur explained.

Among the proposed changes, there is set of legislative initiatives of a macroeconomic nature.

New objectives of the National Bank

First. Expansion of objectives of the National Bank.

"In addition to the goal of ‘maintaining price stability’, it is proposed to formalize the second goal - ‘ensuring financial stability’ and ‘promoting sustainable economic development of the country’," the head of the National Bank said.

From a legal point of view, this will streamline responsibility and the authority to ensure financial stability, and clarify the key areas of the National Bank's activities, Pavel Kallaur emphasized. "The economic effect: the monetary policy will be more focused on cultivating the favorable environment for sustainable development of the economy," he said.

Ensuring financial stability

Second. Improvement of the legal mechanism for ensuring financial stability.

"This norm defines the status of the National Bank as a state body responsible for ensuring financial stability in banking and other areas regulated by it and for ensuring comprehensive approaches to financial stability. This provision is aimed at building up the capacity to take proactive measures, to neutralize possible challenges and shocks, to strengthen interdepartmental cooperation and also at expanding the possibilities in terms of comprehensive and effective counteraction to the system of risks," Pavel Kallaur reported to the head of state.

The National Bank is confident that the implementation of the proposed regulations will improve the effectiveness of the monetary policy and also its consistency with the general economic policy. It will also contribute to the fulfillment of Belarus’ obligations under the Union State program on monetary policy and macroprudential regulations.

After the meeting, Pavel Kallaur told the media that the work to update the Banking Code was not launched spontaneously. It has been on for the past two years. The government, the State Control Committee, both Houses of Parliament, experts and the banking community have been involved in this work.

“We need these updates because technologies are changing, including in the banking system, and the area of protecting the rights of consumers of financial services is strengthening. A new Constitution has been adopted, and we also need to bring the laws in line,” the head of the National Bank said.

In his words, some norms are aimed at harmonizing legislation with that of Russia. “First of all, we are talking about a new goal once the Banking Code is adopted. The goal is to ensure financial stability. The current norm is that the National Bank together with the government provides monitoring. Monitoring is not enough, however. We must have the appropriate tools,” Pavel Kallaur explained. “We have seven programs as far as the National Bank is concerned. They are all aimed at providing favorable conditions for citizens and companies to work with Russian enterprises and citizens. This is done in the interests of the direct participants of the integration process.”

The head of state approved the majority of proposed novelties at the end of the meeting. He instructed to finalize certain provisions and submit the document to the Parliament.

“I think we will be able to promptly complete the work and submit the document to the House of Representatives,” Pavel Kallaur added.