Russia Is Taking Measures To Reassure Foreign Bankers

MOSCOW -- After briefly Russianizing foreign exchange and precious metals trading, the Russian Republic has returned control of those functions to Vneshekonombank, the Soviet international bank.

The republic, under Boris Yeltsin's orders, has assumed many functions of the Soviet central government.

But the Russians changed their stance on the Soviet bank after complaints from bank officials and criticism from bankers in other countries.

The new assignments had been made in a statement signed jointly by the head of the Russian central bank, the republic's finance minister, and the head of its Foreign Trade Bank.

The government of the Russian republic played a key role in foiling the hardliners' grab for power. The Tass news agency said Vneshekonombank's chairman, Yuri Moskovsky, whom President Boris Yeltsin initially moved to replace, appealed to the government Thursday to confirm its current status instead.

"The situation is critical as far as the state's financial position is concerned," said a bank spokesman..

Vneshekonombank is responsible for servicing the Soviet Union's foreign debt of about $60 billion and has a reputation as a prompt and reliable payer.

Russia's turnabout appeared to reflect a recognition of the importance of maintaining financial stability. Many foreign banks are reluctant to extend further credits to a country riven by political conflict.

The Prior Arrangement

President Yeltsin earlier ordered Russia's interior ministry to take over responsibility for the security of precious metals and stones owned by the state.

He said the installations of the Soviet finance ministry, Gosbank (the central bank), and Vneshekonombank on Russian territory would be seized by by Sept. 15.

His order stated that as of Aug. 25, foreign exchange and operations involving precious metals and stones "be carried out exclusively with the agreement of the finance ministry, central bank, and [Russia's] foreign trade bank."

Last Monday, he replaced the heads of the Soviet central bank and Vneshekonombank with his own appointees. He subsequently withdrew those appointments after Western bankers criticized the loss of seasoned leaders. Viktor Gerashchenko continues as central bank chief, while Yuri Moskovsky remains in charge at Vneshekonombank.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.