National Bank triggers deposit outflow from banks
On December 1 2013, the population lowered volumes of term foreign currency deposits in the banking system for the first time this year. The National Bank has taken relatively risky measures to reduce BYR deposit rates in the banking system. Such actions can result in a very quick response from the public who may withdraw both BYR and foreign currency deposits, also in light of the apparent lack of income of foreign loans and cause problems on the foreign exchange market.
In November, the population split into two groups regarding savings. The first group kept its savings in ruble deposits at 50-55% per annum. The second group converted rubles into foreign currency and kept its savings at home. The second group bought $156.4m net, and did not make any deposits in the banking system.
In December, the National Bank implemented some measures which might have a significant impact on the banking system and people’s savings. The NB put restrictions on corporate and private foreign currency loans. Meanwhile, interest rates on private ruble deposits were reduced to 45% per annum. Restrictions on consumer loans were also introduced.
These measures might lead to mass outflow of cash from the banks. Simultaneously, the demand for foreign currency might increase considerably. In addition, in December 2013 Belarus has to repay circa $1bln in foreign and domestic debt. Therefore, by the year-end the National Bank might be on the precipice of seeing its gold reserves reduce dramatically..
Thus, the National Bank’s actions aiming at regulating interest rates in banking are rather risky. If people’s reaction to reduced saving proceeds slips out of control, the National Bank might introduce restrictions on foreign currency purchases on the domestic market.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.