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Lev Margolin: The Banking System of Belarus Is on Brink of Survival

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Lev Margolin: The Banking System of Belarus Is on Brink of Survival

What will happen to citizens' money?

The international Fitch Ratings agency has revoked the ratings of Belarusbank and Belinvestbank because of the sanctions imposed on these banks.

Charter97.org discussed the state-owned banks with economist Lev Margolin.

- Experts say it will cause grave obstacles to obtaining Russian and Chinese loans. Do you agree with it? What consequences will the decision of Fitch Rating bring?

- First of all, it would practically put an end to loans from other countries. Of course, it will make it much more difficult to get Chinese and Russian loans. However, they are still possible, as loans are mainly of a political nature.

When it comes to interbank loans, both Russian and Chinese banks are guided by rating agencies. Another thing is that this is the only agency that has revoked the rating. One can still use data from other agencies, but I think their demarche will happen soon. It may happen not because they don't want to but because it is challenging to issue ratings when non-economic factors bother economic processes. In this case, sanctions.

How can one assess the solvency of a sanctioned bank? Since Fitch agency values its reputation, it simply tries not to deal with such cases where not all the data is available.

- How do the depositors of these two banks, as well as other state banks that may find themselves in a similar situation, feel about the decision? Should depositors today withdraw their money from state banks because of the risk of losing them?

- You know, every depositor should make a decision. It mainly depends not on ratings but on the actions of the National Bank and the commercial banks, where the deposits are placed.

It is a matter of trust, to what extent depositors trust the National Bank of Belarus, its ability to withstand the pressure of the government and other authorities, which are pressing to increase the money supply. Moreover, how much confidence they have in their banks and their ability to run a sensible policy. There are so many variables and circumstances to take into account, and each depositor has to choose.

For my own part, I can say that Belarus is not the country where one can feel safe about one's deposits.

- The countries of the democratic world keep imposing economic sanctions against Belarus. Experts note the National Bank may be on the sanctions list in the future. What consequences can it entail?

- The National Bank is not a commercial one. It does not conduct special operations in the foreign market and is not directly connected with any correspondent ties with other banks. I do not think the National Bank should care about sanctions on it.

It's rather important whether sanctions are imposed on the Belarusian banking system: such as disconnection from SWIFT, as well as the number of commercial banks under these sanctions.

The National Bank is responsible for the stability of the Belarusian banking system. Every bank that falls out of the system increases the burden on the National Bank, as it has to support everyone who is in a critical condition. Therefore, the sanctions are unlikely to affect the National Bank directly. I doubt anyone is going to impose sanctions specifically against the National Bank.

- In April-June, the time deposits of the Belarusians reduced by 1 billion 633.93 million rubles. How serious a threat is this for the economy and the authorities?

- It is quite a serious threat. The very trend matters here, not the reduced sum of deposits over the last 3 months. If this trend continues, the banking system will be on the brink of survival in 2-3 quarters. Hence, one should monitor it. If it continues, it is a solemn warning.

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