In collaboration with the Federal Antimonopoly Service, the Bank of Russia has prepared an analytical paper which proposes a set of competition development measures for the financial market.
Currently, according to the authors of the report, the majority of reviewed segments in the Russian financial market may be characterised as oligopoly in the competitive environment. This is broadly in line with the international trends observed in the economies with emerging financial market. However, such market structure threatens financial inclusion and may also worsen the quality of financial services, raise tariffs and weaken incentives for the implementation of innovations.
Efforts to build up competition constitute an important part of the Bank of Russia’s activities. Measures put forward in the report are both sectoral and cross-sectoral. To develop competition in the financial market in general, it is recommended to formulate the policy governing the stakeholdings of the state in the capital of financial organisations, including for ensuring financial stability and enhancing financial inclusion.
Measures for the banking sector suggest that credit institutions obtain competitive access to attracting funds in deposits and to other money market instruments, and also to issuing bank guarantees acting as third parties’ performance bonds. It is also proposed that credit institutions may, on a competitive basis, get subsidies from the state budget for certain types of concessional funding. This will help level out business conditions for small and medium-sized banks and relative large players.
The report proposes measures to strengthen competition in insurance, payments and funds transfers, and also in other financial market segments.
Besides, the document looks into the new possibilities to improve competitive environment following the emergence of financial technology and innovative business models.
According to the authors of the report, Marketplace platforms will strengthen fair competition among market participants. They will set the ground for the non-discriminatory access to consumers, expand the range of financial products and raise the quality of associated services.
In future, there will be more detailed studies of various markets or products.
Further proposals will be prepared by the Joint Working Group on competition in the financial market set up by the FAS, Bank of Russia, Ministry of Finance and Ministry of Economic Development of the Russian Federation, with the involvement of other stakeholders.