International reserves of the Russian Federation and their volume

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:46

The volume of international reserves plays an important role in the political and financial position of the country on the world stage. In this sense, Russia is consistently in the top ten, even despite the direct dependence of the volume of reserves on oil prices.

Definition of gold reserves

Gold and foreign exchange, or, as they are also called, international reserves (GFR) are state assets that have a high degree of liquidity and are managed by the main monetary institution of the country. As a rule, this body is the Central Bank. Standard gold reserves are calculated in monetary gold and foreign currency, which is called the reserve. Today there are only two such currencies - the US dollar and the euro. In addition, the GVR includes special drawing rights, or SDRs (Special Drawing Rights), issued by the International Monetary Fund, as well as reserve positions in the IMF.

The international reserves of the Russian Federation include all components.

Structuringreserves

Financial institutions today are much more diverse and more widely understood than ever before. Therefore, the components of financial state reserves are more substantial elements. Foreign currency funds are not only cash in the world reserve currency. They also include deposits, including in gold, reverse repo loans with central banks, the Bank for International Settlements, and commercial banks with high credit ratings according to the standards of international rating agencies S&P, Moody's and Fitch Ratings.

This type of reserves also includes debt securities issued by foreign companies. The rating of issued securities must also be high according to the standards of international rating agencies S&P, Moody's and Fitch Ratings. The GVR also includes securities transferred as loans.

International foreign reserve holdings are translated into US dollars at official exchange rates.

International Monetary Fund as part of the gold reserves

The artificial reserve and means of payment include Special Drawing Rights, or Special Drawing Rights. This instrument is issued by the International Monetary Fund (IMF), has no cash form, that is, it represents only entries in bank accounts. Circulates only within the Fund and is used to equalize balances of payments, cover deficits and creditobligations. SDRs have neither debt nor currency characteristics.

This tool appeared in 1969 in order to level the Triffin dilemma, which reflected the contradictions in the Bretton Woods system of organizing monetary relations and settlements between countries. The controversy arose from the clash between the national nature of the reserve currency and its international characteristics.

Reserve position in the IMF includes reserve and credit shares. The excess of the quota of the money supply over the amount that lies in the Fund on the accounts of the state party is called the reserve share. Accordingly, the credit share allows you to purchase IMF funds in excess of the reserve share.

Traditional gold

The structure of the international reserves of the Russian Federation, of course, also contains reserves of monetary gold, that is, physically existing. Initially, gold reserves were formed to provide national currencies. Since 1937, the Russian ruble has been pegged to the dollar. However, after the war in the USSR, the gold mining industry began to rapidly gain momentum, every year the gold reserves in the treasury increased by 100 tons. In 1950, Stalin decided to cancel the peg of the ruble to the dollar and establish the gold content of the national currency of the Soviet Union. Two years later, Stalin put forward the idea of creating an alternative dollar market. But he did not manage to realize the idea. After Stalin's death, Nikita Khrushchev chose a pro-Western path of development. Providing the ruble with gold Soviet leaderconsidered it untimely and returned the peg of the Russian currency to the US dollar.

In the US, the dollar was backed by gold until 1971, when President Richard Nixon officially announced the abolition of the dollar's gold backing. By that time, the country's state gold reserves had fallen to a record 9.83 thousand tons from 21.8 thousand tons in 1949. It was then that the international currency market with floating exchange rates appeared. The market is characterized by free market conditions. And although the dollar and the pound sterling have officially lost the status of reserve currencies, the American dollar has not only retained, but is strengthening its position in every way.

The last time US gold reserves were thoroughly audited was in 1953. The stock is stored in four vaults. In addition to the US treasury reserves, precious metal reserves of at least 60 states are stored in the country. The number of domestic and foreign reserves is kept secret, giving rise to many rumors about this.

Red gold of Russia

According to data from open sources, Russia's international reserves today contain 1238 tons of gold. According to this indicator, the Russian Federation officially ranks sixth in the world. The share of gold in the total volume of gold reserves is 12%. It is worth noting that before the start of the First World War, the Russian Empire had one of the largest volumes of gold in the world - 1.4 thousand tons. World and Civil Wars pretty much devastated the treasury - by 1928 only 150 tons remained. In the Stalin period, the treasury again "swollen"and already contained 2.5 thousand tons by 1953. However, then gold reserves only decreased, a rather large amount of it was sold abroad by Nikita Khrushchev. In 1991, representatives of the country's leadership stated that only 290 tons of precious metal remained from the Soviet legacy.

Russian gold reserves are divided into two disproportionate parts. Most of what the Central Bank manages in agreement with the Russian government is stored directly with the Bank of Russia. The second part is in the State Fund for Precious Metals and Precious Stones of the Russian Federation, decisions on spending and replenishing this part of the reserve are made directly by the president, as well as by the government.

Gold stocks dynamics

Reserves of the yellow precious metal included in the international reserves of the Russian Federation, experts at the beginning of 2014 estimated at $40 billion. Although throughout 2013 the Central Bank actively purchased gold on the Russian market, nevertheless, according to analysts, the value of the precious metal decreased by $11 billion. This led to the fact that at the end of 2013 the level of gold fell to 7.8% included in the total international reserves of the Russian Federation. The share of the currency component in the basket at the beginning of last year was increased to 92.2%.

Analysts note that since the beginning of this year, the Central Bank has continued to increase gold reserves in gold reserves, increasing their volume three times. Since this behavior is unusual in the gold market, foreign expertssuggest that it is distrust in the American currency that pushes the Central Bank of the Russian Federation to purchase.

Oil is the basis of Russia's gold reserves

The growth of the national "pod" began in the zero years of the 21st century. The international reserves of the Russian Federation grew by leaps and bounds thanks to high prices for hydrocarbons until the crisis year of 2008. By that time they amounted to 600 billion dollars. Since the beginning of the crisis year, the National Welfare Fund has been established to maintain stability in the country. Russia's international reserves have become a kind of financial donor for the new structure. This made it possible to prevent serious crises, but the volumes of gold reserves were reduced. Only by the middle of 2013 they managed to restore them - up to 533 billion rubles.

In the spring of last year, the situation began to change dramatically. The boycott announced by the countries of Western Europe and the United States due to the annexation of Crimea to Russia last spring, in addition, a sharp drop in oil prices, devaluation of the national currency, support for the ruble, sanctions and counter-sanctions - all this became a serious test for the Russian economy and could not not affect the state of the gold reserves. By the middle of the year, their volume had fallen by a third, to $382 billion, of which $12 billion was accounted for by IMF payments. The fall continued throughout the year, and at the beginning of this year, the international reserves of the Russian Federation reached the 2007 low of $374.7 billion. At the beginning of May, their volume was 358.5 billion