Problems of Russias Integration into the Global Financial System

423
DOI: 10.20542/0131-2227-2015-6-82-90

. Kuznetsov, Financial University under the Government of the Russian Federation, 49, Leningradskii Prosp., Moscow, 125993, Russian Federation (kuznetsov0572@mail.ru)

Abstract. The author examines problems of Russia’s integration into the global financial system since early 1990s. During this short period of time Russia has turned from a net debtor into a net creditor. This is evidenced by its current net international investment position, as well as by active participation in the formation of credit resources of the key international financial institutions, particularly IMF. Still, the net investment income of Russia is negative. Such a disadvantage is explained by the difference in interest rates between payments of Russia on its external obligations and receipts as income from investments in foreign assets, mainly low-income bonds of developed countries, which form Russian international reserves. For three centuries the United Kingdom and the United States have been playing key role in the development of the global financial system. Today London and New York still operate nearly two thirds of the volume of global flows of capital in the international financial markets. Thus, as one of major economies in terms of GDP and as a resource-richest country of the world, Russia, as author argues, can rightfully claim for a more adequate share of income from the global financial intermediation. Obstacles include the lack of development of the domestic financial market and insufficient international demand for financial instruments denominated in Rubles. Russian Ruble remains a purely internal currency which practically is not used in the international trading and financial operations. At this stage, Russia’s inability to influence the basic conditions of refinancing on international capital markets, as well as the recent Western sanctions make impossible the full-scale participation of Russia in the processes of financial globalization. The author concludes that alternative way of Russia’s entry into the global financial system lays in playing the key role in the creation of the regional financial market of the Eurasian Economic Space.

Keywords: the global financial system, global capital flows, international financial markets, international financial centers, international investment position, the interest rate differential, Russia as a global lender, sanctions, the Eurasian Economic Space


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For citation:
Kuznetsov A. Problems of Russias Integration into the Global Financial System . World Eonomy and International Relations, 2015, no. 6, pp. 82-90. https://doi.org/10.20542/0131-2227-2015-6-82-90



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