Legal Framework for the Formation of a Financially Strong and Stable Banking System in Russia

Abstract

The article studies the formation of a legal framework governing the banking system of Russia, in particular those legal norms which influence its financial strength and stability. The establishment of a new banking system was characterized by the lack of a legal requirement to such notions as an authorized capital, statutory reserves, an insurance and reserve fund, and professional training of managers; it has led to the problem of the banking system, namely the low capitalization of the rapidly appearing banks. Therefore, the article examines the legal acts which enhance the requirements to the banks’ capitalization and exit of insolvent credit institutions which do not meet the legal requirements from the banking services market. The author analyses the achieved capitalization level of the banking system and its conformity with the objectives of economic development set before the banking sector. The author proposes to further improve the legal framework in order to enhance the strength and stability of the Russian banking system.

Keywords:

bank, credit institution, banking system, professional training, a bank’s assets, a bank’s authorized capital, a bank’s own funds