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National Interests: Priorities and Security
 

The establishment of an international financial center in Moscow as a major component of the economic security of Russia

Vol. 10, Iss. 33, SEPTEMBER 2014

Available online: 30 August 2014

Subject Heading: Priorities of Russia

JEL Classification: 

Pages: 2-15

Ziyadullaev N.S. Institute of Market Problems, RAS, Moscow, Russian Federation
nabi926@mail.ru

Ivanova D.A. RE prozhekt development, Ltd., Moscow, Russian Federation
ivanovada@gmail.com

The article analyzes the creation of an International Financial Center (IFC) in Moscow as an organic and integral part of the financial and economic security of Russia. The authors provide the objective prerequisites and the competitive advantages of the IFC in Moscow. The paper states that in order to achieve this objective Moscow must resolve three strategic objectives: enter as equal partner in the world banking community of the developed States; create an International Financial Center in Moscow; preserve an economic independence of the national banking system. Based on international rating, the article offers a factor analysis of Moscow with respect to the global financial centers. Moscow plays a dominant role in financial sector of the national economy: it accounts for over 80% of the financial flows of the country and more than 50% of the Russia's banking capital. In terms of the number of credit institutions, Moscow is an undisputed leader among the other Russian regions. The proportion of the Russian banks in the financial market of Russia constitutes about 90%, while the weight of foreign capital in the Russian bank capital exceeds 25%. This is an obvious advantage of Moscow as a candidate to become the IFC among other Russian cities. The capital megalopolis hosts more than one-third of all insurance organizations, at the same time, the amounts of insurance premiums and insurance payments account for about 2/3 of all-Russian operations. Almost 90% of the headquarters of foreign banks operating in Russia and international financial organizations, and almost all stock exchanges trading of the securities are concentrated in Moscow. The head offices of the majority of the foreign companies, which operate in the regional markets of Russia, are located in Moscow. The award to the city of the status of an international financial center may be subject to ensuring the following conditions: political stability of the home base country of the IFC; high levels of economic growth; sophistication of the financial sector; the clarity and comprehensiveness of the legislation; ease of doing business; low levels of corruption and crime; the minimum number of barriers in the economy for foreigners; favorable tax climate of the country; modern urban infrastructure. The paper reveals the mechanisms of the IMF formation as an essential instrument for ensuring the economic security of the country. The article points out that in today's Russia monetary policy differs from the global trend because of its rigidness: after the crisis the interest rate in the developed countries is near zero. The authors emphasize that in order to reorient this policy towards the modernization and development of the country's economy, the authorities must expand the opportunities of crediting of the real sector of national economy, provide financial support and implement measures, which are aimed at enhancing of authorized capital of the Russian banks.

Keywords: economic security, International Financial Center, IFC, formation mechanisms, transformation, world financial banking system, investment support, world experience

References:

  1. Ziyadullaev N., Kibardina Yu. Ekonomicheskaya bezopasnost' i mezhdunarodnaya deyatel'nost' bankov Rossii [Economic security and international activities of the Russian banks]. Natsional'nye interesy: prioritety i bezopasnost' National interests: priorities and security, 2011, no. 25, pp. 40–45.
  2. Ivanov A.D., Ivanova D.A. Mekhanizmy infrastrukturnoi obespechennosti sozdaniya mezhdunarodnogo finansovogo tsentra (MFTs) v Moskve [The mechanisms of the infrastructure security to create an international financial center (IFC) in Moscow]. Ekonomika stroitel'stvaConstruction economics, 2013, no. 3, pp. 30–38.
  3. Modernizatsiya i ekonomicheskaya bezopasnost' Rossii [The modernization and economic security of Russia]. Moscow, St. Petersburg, Nestor-Istoriya Publ., 2014, 452 p.
  4. Moskva kak London [Moscow is like London]. Vedomosti, March 18, 2014.
  5. Order of the Government of the Russian Federation “On Approval of the plan of action “Establishment of an international financial center and the improvement of the investment climate in the Russian Federation” of June 19, 2013 № 1012-p. (In Russ.)
  6. Pravitel'stvo ne uvolyat [The government will not be dismissed]. Vedomosti, April 23, 2014.
  7. Skol'ko stoit Rossiya: 10 let spustya [How much does Russia cost: 10 years later]. Vedomosti, April 01, 2014.
  8. Tsvetkov V.A. Tsikly i krizisy: teoretiko-metodologicheskii aspekt [Cycles and crises: a theoretical and methodological aspect]. Moscow, St. Petersburg, Nestor-Istoriya Publ., 2013, 504 p.

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