Joint Eurosystem - Bank of Russia Seminar Helsinki, 25 - 26 May, 2004

The Eurosystem – i.e. the European Central Bank and the national central banks of the euro area – and the Bank of Russia are holding their first joint central bank seminar, which began yesterday, 25 May, at the House of Estates in Helsinki. The Seminar is being attended by governors and high-level representatives of the ECB, the Bank of Russia and the 12 national central banks of the euro area. The seminar, which is being hosted by the Bank of Finland, is also being attended by government and parliamentary representatives from Finland and the Russian Federation and by representatives of the European Commission and the Presidency of the European Union (EU).

The purpose of the seminar is to strengthen dialogue and enhance relations between the Bank of Russia and the Eurosystem, which have intensified in recent years. For example, the ECB is currently coordinating a major technical assistance programme – funded by the EU – in the field of banking supervision with the Bank of Russia. The project is being implemented together with nine national central banks of the Eurosystem and three EU supervisory authorities.

At yesterday’s opening the participants were welcomed by Matti Louekoski, Acting Governor of the Bank of Finland. He stressed that the Russian Federation has been enjoying rapid economic growth for several years and that this is having a positive impact on the European economy. Mr Louekoski made the point that the European Union is fortunate to have one of fastest growing economies as its neighbour and that Russia and the EU must get to know one another better in order to enhance cooperation in the future. He said that while the seminar was a small step, it was a step in the right direction and that the real issue was not about “Russia and Europe” but about “Russia in Europe”.

In addressing the audience, Jean-Claude Trichet, President of the ECB, welcomed the Russian Federation’s integration into the global economy and the strengthening of economic links between the Russian Federation and the EU, a process which has been fostered by EU enlargement. This has not only created new opportunities to explore the mutual benefits of economic integration in terms of trade and investment flows, but also provides a strong basis for constructive dialogue between the Eurosystem and the Bank of Russia on the central banking dimension of this process. Against this background, the seminar provides an excellent platform for effective bilateral cooperation, which is essential for both institutions in meeting the challenges which they face at the global, regional and domestic level.

In his keynote speech, Sergey Ignatiev, Governor of the Bank of Russia, focused on the monetary policy of the Bank of Russia and the macroeconomic challenges for the Russian Federation.

Seminar participants are exchanging views on central banking issues, such as the conduct of monetary policy under free capital mobility, banking system development and financial sector stability. They are also focusing on economic links between the Russian Federation and the EU, covering, in particular, the issues of finance,direct investment and trade.

Seminar participants are discussing the implications for monetary policy and interest and exchange rates of an environment characterised by increasingly free capital mobility, as is currently the case in the Russian Federation. In the same context, participants are reviewing the process of liberalisation of capital movements in other countries and regions.

The increasing degree of real and financial integration between the Russian Federation and the EU is at the centre of discussions on economic links between Russia and the EU. The EU accounts for approximately one half of the Russian Federation’s trade, and corporations from EU Member States account for a substantial part of foreign direct investment in the Russian economy, including the banking sector. Conversely, the Russian Federation is the EU’s fifth largest trading partner and accounts for over 20% of the EU’s requirement in terms of imported fuel.

Sound and effective prudential regulation and supervision are key to enhancing financial development and stability. Against this background, participants are discussing the challenges of financial sector reforms in both economic areas, the implications of foreign participation in banking sector development and the key elements of a macro-prudential framework for financial regulation and supervision.

In conclusion, the Helsinki Seminar provides a graphic illustration of the usefulness of an active policy of dialogue between the Eurosystem and the Bank of Russia. Participants have agreed to foster cooperation at various levels, inter alia by organising similar meetings in the future.