HERALD - SEPTEMBER 2019 by HERALD

O F F I C I A L P U B L I CAT I O N O F F B A E AC , I B C

eurasian financial & economic

# 3 (8) | 2019

PER SONALITY

ASKAR SALYMBEKOV

Union is a way to success and prosperity

4 Timur Zhaksylykov EAEU single service market: outlook

8 Alexander Shokhin Business cooperation Russiaâ&#x20AC;&#x201C;France: provisional results and prospects

14 Demchigjavyn Chimiddorj Mongolia and Russia: features of cooperation in the energy sector

IV INTERNATIONAL EXHIBITION FORUM «EURASIAN WEEK – 2019» BISHKEK, KYRGYZ REPUBLIC, SEPTEMBER 25–27, 2019

«THE EAUE: CONSOLIDATION. DEVELOPMENT. STRENGTH» The Eurasian Week is the largest international business forum in the Eurasian Economic Union (EAEU). In 2019, the Forum focuses on summarizing the results of the first five years of the interaction between the Eurasian Economic Union and the global community.

REASONS TO VISIT FORUM

All about the advantages of the EAEU first hand. B2B sessions will allow to discuss the features and bonuses of doing business within the EAEU countries with the real practitioners from the various areas and forms of ownership: from small to large business

More than 20 events on the site and more than 2000 participants. An intense business program, including strategic, partnership and youth tracks

A broad youth agenda: School of the young leader of the EAEU, presentation of educational programs on Eurasian subjects of the EAEU universities, business game for young leaders of the EAEU

Possibility to find new partners and expand the geography of doing business: the program will include industry exchanges of subcontracts

Extensive exhibition dedicated to agriculture, industry and other industrie

PARTICIPATION IS FREE. REGISTRATION ON EURASIANWEEK.COM

HERALD eurasian financial & economic

ED I T O R IA L B OA R D :

# 3 (8) | 2019

Alexander Murychev, Chairman of Editorial Board, Chairman of Coordinating Council of FBA EAC, Executive Vice-President of RSPP, Chairman of IBC

FOUNDERS: Financial & Banking Association of Euro-Asian Cooperation (FBA EAC)

Anvar Abdraev, President of Union of Banks of Kyrgyzstan Bakhytbek Baiseitov, President of Association of Banks of the Republic of Kazakhstan

International Banking Council (International Coordinating Council of Banking Associations)

Oleg Berezovoy, General Director of FBA EAC Andrea Boldi, owner of the company NEMESI S.R.L. (Italy) Yves Pozzo di Borgo, Former President of friendship group with Central Asia in the Senate (France)

PUBLISHER:

Samvel Chzmachian, Deputy General Director of FBA EAC, Head of Representative office of FBA EAC in Armenia

Financial & Banking Association of Euro-Asian Cooperation (FBA EAC)

Alexandre Dzneladze, President of Association of Banks of Georgia

Editor in Chief: V. Murin Executive editor: S. Orlova

Tudor Afanasov, Deputy Chairman of the Coordinating Council, Presidnt of CCECRR

Editor: A. Gusev

Bakhtiyar Khamidov, General Director of Uzbekistan Banking Association

Page-proofs: A. Bagaev

Anatoly Kazakov, Chairman of the Coordination Council of Financial and Banking Council of the CIS Elena Korobkova, Executive Director of Independent Association of Banks of Ukraine Manish Kumar, General Director of Soltex Group Ltd., Head of Representative office of FBA EAC in India, Sri Lanka, Bangladesh, Malaysia Alexander Kuchinsky, Deputy Chairman of FBA EAC Coordinating Council, Chairman of the Association of Belarusian Banks Berislav Kutle, CEO of Banks Association of Bosnia and Herzegovina Istvan Lengyel, Secretary General of Banking Association for Central and Eastern Europe Amirsho Miraliev, Chairman of the Board of Association of Banks of Tajikistan Valery Murin, Editor in Chief of the magazine "Eurasian Financial and Economic Herald" Zakir Nuriyev, President of Azerbaijan Banks Association Svetlana Orlova, General Director of Information and Publishing Center “Eurasia” Ltd. Bratislav Pejaković, Secretary General of Association of Montenegrin Banks Krzysztof Рietraszkiewicz, Chairman of Polish Bank Association Anatoly Tkachuk, Vice-President of FBA EAC, President of “Russian mineral resources” JSC – managing company of GC Rustitan Dumitru Ursu, Chairman of Moldovan Bankers’ League Vladimir Vasić, Secretary General of Association of Serbian Banks

Corrector: A.Panyugina Editorial Board: E. Berezovaya, O. Ryazanov Translators: S. Arkhipova, K. Tereshenko PUBLISHER'S ADDRESS: 17 Kotelnicheskaya nab., Moscow, 109240, Russia +7 495 663–02–08/13 office@fbacs.com www.fbacs.com PRINTING HOUSE: Released in the «Granitsa Publishing House» Ltd. Format 210x297 mm. 124 pages. ISSUE DATE: Fall 2019

Opinions of authors do not necessarily coincide with those of the editorial office. The editorial office is not responsible for the content of the advertisements. Advertised goods and services are subject to mandatory certification. Reprint is allowed only with the written permission of the editorial office. Manuscripts are not reviewed and not sent back. Reprint of texts and photos of the magazine “Eurasian Financial & Economic Herald” is allowed only with the written permission of the editorial office. When quoting, reference to the magazine is required. Registered in the Federal Service for Supervision of Communications, Information Technology, and Mass Media (Registration number ПИ № ФС77-75043 dd. 19.02.2019).

Глобальная экономика chairman’s corner

Dear colleagues and friends! Welcome back. The members of our Editorial Board have made a lot of efforts so that in spite of the holiday time, high-quality and interesting materials in the issue appear. I hope, we have succeeded, and you will “plunge” into the diverse world of finance and economics, history and geography with us. Alexander Murychev, The opening article of one of the Chairman of Editorial Board most respected businessmen of the of the magazine "Eurasian Financial and Economic Herald" Republic of Kyrgyzstan, founder and honorary President of the Association “Dordoi”, Askar Salymbekov, tells not only how the country is developing today, how comfortable businessmen and investors are there, but also about the social responsibility of business to the state, on the need to promote the spiritual and cultural development of the young generation in the name of preserving civilization. Furthermore, we turn to business cooperation of countries trying to find a proper balance between politics and economy. It will be about economic interaction of such courtiers as Russia, France, Romania, China, Korea, Mongolia and others. In the article by the FBA EAC President B.Baiseitov “Development institutions as an instrument of the national economy”, he raises issues of effective interaction between banks and development institutions using the example of the Republic of Kazakhstan. The main conclusion to which the author has come – is that, along with the obvious usefulness of the presence of development institutions in countries, they should not only reflect the interests of global players who finance their activities, but also not forget about their main mission - to promote the development of national economies by saturating it with cheap resources in order to eliminate domestic economic imbalances. As you know, the best friends of girls are diamonds. But gold can be a good friend and helper as the international monetary system turns from unipolar to multipolar, as follows from an article by a charming girl - Tatyana Fitz, Director of central banks and public policy of the World Gold Council. Human recourses! At this stage of the development of civilization, this factor of effective economy takes precedence over the rest. Therefore, we devote the impressive amount of pages of the Herald to the topic of formation of a single labor market on the territory of the EAEU through the recognition of qualifications, the development of an independent qualification assessment system, and new approaches to the training system for specialists. The materials on the digitalization, the breakthrough latest technologies in construction and refrigeration, the scientists’ discussions about “who are we?” and “where are we going?”, fast facts from the history of currency units of the world are also interesting. In the heading “The world through the eyes of a photographer”, a series of photographs of new authors are presented. And of course, pay attention to our block of ads. Perhaps participation in one of the events presented here will be a useful discovery for you, a new impetus to the development of your own business. We are glad that you are with us.

CONTE NT 4

PERSONALITY A. Salymbekov. Union is a way to success and

EAEU: TODAY AND TOMORROW T. Zhaksylykov. EAEU single service market:

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prosperity

outlook

RSPP NEWS A. Shokhin. Russia-France business cooperation: provisional results and prospects

WORLD TRENDS T.Fic. Gold in the changing international monetary system

SUBJECT FOR DISCUSSION A. Murychev. The development of the system of independent qualification assessment on financial market

FOUNDER’S PAGE. FBA EAC

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Forming a single labor market on the territory of EAEU via qualification recognition

FOUNDER’S PAGE. IBC B. Baiseitov. Development institutes as an instrument of the national economy (Kazakhstan)

E. Korobkova. Agrarian receipts and financial restructuring: experience of cooperation with international institutes (Ukraine)

S. Chzmachian. Interaction of development institutes and commercial banks: best world practices (Armenia) FINANCIAL SYSTEM OF THE COUNTRIES OF EURASIA

Improved financial literacy of the population is the priority of the activity of the Union of Banks of Armenia

A.Kuchinsky. Belarusian banks – trending digital

EXPERT OPINION D. Chimiddorj. Mongolia and Russia: features of cooperation in the energy sector

BUSINESS IN THE COUNTRIES

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The Romanian economy: strategy, investment policy and cooperation with Russia

TECHNOLOGY A. Golik. «PIONEER»: Breakthrough technology in the service of construction business

B. Babakin. Saving resources: Refrigerating appliances and technology based on electrophysical methods

Forum «Rivers of Russia»: preservation and development of legacy of the past – a step into the future

DID YOU KNOW V. Kryachko. On the way of development of civilization: the eyes of geologist

PARTNER NEWS

BIFF 2019: digitalization – new rules for a new game

HISTORY OF MONEY V. Krasnikov. The rand born in South Africa

THE DEVELOPMENT OF THE SYSTEM OF INDEPENDENT ASSESSMENT OF QUALIFICATIONS ON FINANCIAL MARKET Alexander Murychev. Personnel gap considerably limits the development of business in Russian regions.

BUSINESS COOPERATION PROVISIONAL RESULTS AND PROSPECTS Alexander Shokhin. France has always been a focus area in the international activities of Russian Union of Industrialists and Entrepreneurs.

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EAEU SINGLE SERVICE MARKET: OUTLOOK Timur Zhaksylykov. It is the Eurasian integration that is an important factor of higher competitiveness of businessmen in the Union member-states and promotes economic growth of the countries and better living standards of population.

GOLD IN THE CHANGING INTERNATIONAL MONETARY SYSTEM Dr Tatiana Fic. As the international monetary system transitions from the unipolar, towards a multicurrency system, gold, as a safe haven asset and a hedge against financial shocks and currency crises, has remained and will continue to remain an important element of central bank portfolios.

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DEVELOPMENT INSTITUTES AS AN INSTRUMENT OF THE NATIONAL ECONOMY Bakhytbek Baiseitov. Development institutes should not forget about their original mission â&#x20AC;&#x201C; to promote national economy via its satiation with cheap resources directly and through banks.

Personality

Askar Salymbekov, Member of the Supervisory Board of Financial & Banking Association of Euro-Asian Cooperation

UNION IS A WAY TO SUCCESS AND PROSPERITY THE FOURTH INTERNATIONAL FORUM “EURASIAN WEEK” WILL TAKE PLACE IN SEPTEMBER THIS YEAR IN BISHKEK. THE BUSINESS PROGRAM OF THE FORUM WILL COVER SECTORAL PRACTICAL ISSUES CRUCIAL FOR BUSINESS DEVELOPMENT WHICH IS REALLY IMPORTANT FOR EAEU MEMBER-STATES. THE EURASIAN FINANCIAL & ECONOMIC HERALD, THE INFORMATION SPONSOR OF THE EURASIAN WEEK ON THE EVE OF THIS EVENT ASKS A FEW QUESTIONS TO ONE OF THE MOST POWERFUL BUSINESSMEN OF THE REPUBLIC OF KYRGYZSTAN ASKAR SALYMBEKOV.

– Far in 2015 Kyrgyzstan joined the Eurasian Economic Union and became its fifth member-state. How would you evaluate the results of this integration in general and for Kyrgyzstan’s economy in particular? Especially considering the global economic challenges? – Kyrgyzstan’s membership in the Eurasian Economic Union wasn’t a mere coincidence. There was a strong background for economic union with such countries as Russia, Kazakhstan, Armenia and Belarus. Besides we have historic, economic and cultural ties with Russia. These four years showed that the EAEU membership had positive effect on our economy. Of course there are some difficulties for example customs, regulation and technical issues. But it is a natural evolutionary development were weaknesses are removed gradually.

When the whole world unites into associations this alliance is very important for our small country. And only in alliance with its economic partners – EAEU member-states – Kyrgyzstan will be able to survive and develop. – In late September, 2019 in Bishkek the Eurasian Economic Commission together with the EAEU memberstates will host the fourth international forum “Eurasian Week” with the Eurasian Financial & Economic Herald as information sponsor. The business program of the Forum will cover sectoral practical issues crucial for business development which is really important for the Kyrgyz Republic as well as for other EAEU participants. Could you share your expectations of this definitely key-note event?

– It is no coincidence that the Forum is held in Kyrgyzstan since the goal of cooperation of the countries within EAEU is to form and improve the single market of goods, services, capital and labor resources. Today Kyrgyzstan’s GDP growth is positive and officially amounts to 3-7% annually. Besides the turnover between Russia and Kyrgyzstan in 2018 grew by 17%. That is why joint and national enterprises will become an important element of the economic strategy of EAEU and will give a new impetus to the economic development. Seventy one regions of the Russian Federation already have direct connections with the regions of Kyrgyzstan. Against the Western sanctions towards Russia the regulatory requirements of EAEU may gain flexibility and

resistance to the external pressure. This will allow to intensify integration between the EAEU countries if the issues of unwarranted restrictions of trade are tackled responsibly. “Trade war” of the USA and China will open new opportunities for the Union: new markets, de-dollarization, intense conjunction of EAEU and “One Belt One Road”. Besides the conjunction of EAEU and the “Economic belt Silk Road” can get a more practical and balanced format. Currently the mechanism of tracking goods imported to the EAEU customs territory is being approved. The development of digital transport technologies will become one of focus areas. The recent meeting of prime-ministers in Kyrgyzstan discussed and experiment of monitoring of automobile transit traffic

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with the use of navigation seals. One of its goals is to develop a proposal to adjust the key differences in order to improve the project of international agreement on single transit system of EAEU. – This March the 8th Russian-Kyrgyz interregional conference “New horizons of strategic partnership and integration” was held. What crucial results of the event are worth mentioning? – At the conference during a round table “The development of agricultural complex of Russia and Kyrgyzstan with regards to transport and logistics potential” the participants discussed the dynamics of supplies of Kyrgyz agricultural products to the trade chains of Russia, the construction of trade and logistic distribution centers in Kyrgyzstan, the future of joint projects in the area of production and processing of agricultural prod-

ucts in the area of organic farming. Transport and logistics system is one of the key aspects of cooperation between Russia and Kyrgyzstan so the experts from both sides spoke about the development of interregional freight. The Association Dordoi which together with the Union of Banks of Kyrgyzstan represents the Kyrgyz Republic in Financial & Banking Association of EuroAsian Cooperation, and Russian company “RosAgroMarket” signed a Memorandum of joint construction of a logistics center in Kyrgyzstan. It should also be mentioned that the Eurasian Economic Union has opportunity to increase export to the markets of the third countries which consider the Eurasian market as a promising one. While we are ready to provide a full range of freight services, customs and

Personality

terminal services of the fruitand-vegetables supply. – The Association Dordoi was launched in 1991. You are the founder, the owner and the Honorary President. The development of Association wasn’t easy but today it is one of the prominent representatives of Kyrgyz business and greatly affects the economy of the country. I believe that the readers of the Herald are eager to know about the Association directly from its founder. Could you tell us about the history of development and success of your brainchild, its promising areas and charity work? – In early 90-s when following the Soviet collapse our young Republic started the transition to market economy, people faced the challenges of trade management and lack of business skills. Pop-up retail in the streets and unsuitable markets created difficulties both for young businessmen and municipal authorities. The only thing I wanted was to assist in the trade management. So, on December 7, 1991 we opened a market Dordoi in the North of Bishkek, on a waterlogged open space. Like with any start-up there was a lot of critics and revolt. Especially about the location. Many didn’t understand that it was a

cross of the upcoming routes which created transport and trade hubs. Moreover in those times Kyrgyzstan gained a status of a “dead-end” country without any trade roads and access to sea ports. But our zeal and relentless work brought results: in a short period the trade and market complex Dordoi became a land hub connecting trade roads from China to CIS, Europe and Middle East. According to the World Bank’s research Dordoi is ranked as the most suc-

cessful social and economic project in our country’s history. Now it ranks in top ten largest markets in the world and has created a vast labor market for Kyrgyzstan and neighboring states with more than 50 thousand workers, and about 160 thousand people engaged in other activities related to the trade and market complex. And the most important thing is that 600 thousand people depend of these workers. Besides experts recon that Dordoi’s activity trig-

About the author

Askar Salymbekov Askar Salymbekov, a historian, an economist, a politician, a businessman and patron as well as a devoted football fan, one of the most famous people in Kyrgyzstan and far beyond. He is a founder and Honorary President of the Association “Dordoi” launched in 1991 as a trade and market center in Bishkek which is now a founding organization for many companies, enterprises and working places. The achievements of A. Salymbekov are marked by many rewards: order “Manas, medals “Labor merit”, “Dank” and the Golden medal of the Nobel Prize of the economist

gered more than 18 sectors and areas of economy of Kyrgyzstan including consumer industry, freight, air carriage, services and production. All incomes are invested domestically in new companies which are now successful in medicine, education, production, logistic etc. In fact we launch new companies annually, this year as well: in autumn we are opening a new school, and early next year – the largest meat factory with updated equipment. A lot of attention is paid to charity and support of socially vulnerable population, sportsmen, workers of culture, art and science. Every year Dordoi allocates millions to these areas and is going to build up the amounts of financial and technical assistance to those who need it. Creative incentives are also on the agenda for example mass transplantation, parks cleaning and the most important – youth enlightenment through socially important campaigns and education. – In 2011 in one of the interviews you said: “Today in the context of global situation with different crisis, cataclysm, revolutions, wars, more frequent cases of the force of nature I worry that the mankind stepping in the era of information technologies and scientific and technical progress loses its spiritual and cultural growth. I believe that current troubles on the planet are first of all caused by a spiritual crisis of the mankind”. Do you still believe this? – Yes, I still believe this. Today when the whole world fits in a smart phone most

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people has got under the influence of subcultures and trends with their own value system. As it is well known values transform the society and dissolve ethno cultural boundaries while against the background of economic crisis and other turbulence this process speeds up. In order to intensify the spiritual and cultural growth of the population in particular the youth our community trust “Askar Salymbekov Fund” continually supports workers of culture and art. Tens of projects have been completed creating plays, evenings, recitals. The publication of historical, scientific and fiction literature have also been supported. Special attention was paid to a documentary about an outstanding statesman Zhusup Abdrakhmanov who was one of the founders of Kyrgyz nationhood in the first part of 20th century. The film was presented at a private screening in June, 2019. Now we are working on a new documentary to commemorate the 100th anniversary of an outstanding statesman of Kyrgyzstan Turdakun Usubaliev to show his large contribution into the social and economic development of the country and its nationhood. Besides the Fund is engaged into large educational projects to provide the population with sound additional education in cities and regions of the Kyrgyz Republic. The education programs focus on personality development, information technologies, business school and language. Following its successful experience the Fund launches a new school for students from Kyrgyzstan and foreign countries.

V.Leontyev; the orders of the Russian Federation “Honorary Citizen of Russia” and the International Assembly of capitals and cities “For contribution into the sustainable development of CIS cities”; order RioBranko, a state reward of Brazil. A. Salymbekov is a member of the Supervisory Board of Financial & Banking Association of Euro-Asian Cooperation.

One more priority of our work and support is sport in Kyrgyzstan. We have been involved in this activity since 90-s when we started to revive the national sport Kok Boru. We developed rules and competition procedures, and now Kok Boru has become a popular sport not only in our country but also abroad. Moreover judging by the high results of our football team at the Asia Cup 2018 one can speak about our footballers’ high level as well, part of who are trainees and players of the football team “Dordoi”. We extensively support all promising sportsmen who apply for financial and procurement assistance. And I feel joy when new stars appear of the sport horizon. It is the best reward for me. We should understand: cultural and spiritual development of a personality based on historical, cultural and ethical traditions of our people should beneficially cooperate with the modern world, its technologies, but should not vanish in it.

EAEU: TODAY AND TOMORROW

EAEU SINGLE SERVICE MARKET: OUTLOOK INTERVIEW OF MEMBER OF THE BOARD – MINISTER IN CHARGE OF ECONOMY AND FINANCIAL POLICY T. ZHAKSYLYKOV TO THE MAGAZINE “EURASIAN FINANCIAL & ECONOMIC HERALD”

EURASIAN ECONOMIC COMMISSION

– Mr. Zhaksylykov, the Eurasian Week which you chair includes a panel session “Business, money, people: approaches to deepening integration within the EAEU”. Could you please give some details about the subject for discussion with colleagues? – This year is the fifth anniversary of the Treaty on the Eurasian Economic Union. Today the Eurasian Economic Union successfully works in many areas. The Union member-states demonstrate growth of GDP, foreign and mutual trade of goods and services. The GDP of the Union member-states in 2018 grew by 17.6% in comparison to 2015, the industrial production grew by 34.3% correspondingly, foreign trade – by 30%, mutual trade – by 30.9%. No doubt that the driver of the economic growth of the Union memberstates is business. That’s why it is necessary to create most favorable conditions for entrepreneurship by means of freedom of service trade, incorporation, activities and investments. And it is the Eurasian integration that is an important factor of higher competitiveness of businessmen in the Union member-states and promotes economic growth of the

Timur Zhaksylykov, Member of the board – Minister in charge of Economy and Financial Policy of Eurasian Economic Commission

countries and better living standards of population. The current global trend of economic development is a larger share of services in GDP of all countries in the world. In particular in the mature economies services account for 70% of GDP, In the European Union – 73.3% (in 1970 – 53.3%), in USMCA (former NAFTA) – 79% (in 1970 – 64.8%). Promotion of services becomes one of the priorities of economic development of the Union member-states as well and a gradual growth of the amount of exported services proves it. Total services export of EAEU in 2018 reached $83 525 million and in comparison to 2000 it increased sevenfold. Positive dynamics in the sector especially in the last four years is related to integration processes, creation of conditions for mutual trade between the Union member-states including the implementation of a single market rules, improvement of internal regulation, liberalization of service trade. And it is the liberalization carried out by the Union member-states that brings the most considerable results since it implies the removal of limits, bar-

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riers and other obstacles of investments and services. As a proof is bigger investment flows in 2018 in the Union which grew by 36.7% compared to the previous year. This trend evidences more active investment cooperation, execution of joint business projects of the Union states, gradual promotion of free service trade and incorporation, practical use of the advantages of the single service market. Today the share of service sectors of the EAEU single market in the total service sector amounts to over 55%. The single market enables the service providers to work in any Union member-state without incorporation or readmission of permit. Moreover they don’t need the readmission of qualification for service provider personnel, qualifications are recognized automatically. In this regard further extension of statement of service sectors within the single market is anticipated which will allow the Union countries use this potential to increase service share in the economies. However considering the future of this area we would also like to discuss the issues of economic development

with regards to compliance practices which require clarification. For example within the single service market there are still such problems like nonrecognition by some regulators of the permits issued to a service provider in one state and valid on the territory of any EAEU member-state. In some cases there are limitations for automatic recognition of qualifications of service provider personnel received on the territory of any Union member-state. Freedom of incorporation is not fully exercised. It is necessary to discuss the additional requirements when opening accounts for service providers and their transaction of money from one Union country to another. Potential advantages of service liberalization depend on internal regulation level. Once it is improved the advantages of service trade liberalization are improved as well as regulation practice. To achieve this goal on December 26, 2016 the Supreme Eurasian Economic Council approved the Rules for the regulation of trade in services, incorporation, and activities which are a kind of basis for the freedom of services and business within the Union.

EAEU: TODAY AND TOMORROW

Meeting of Advisory Committee for Intellectual Property Moscow, Russian Federation, EEC Headquarters, March 6, 2019

In its turn the Commission monitors the implementation of these Rules in the legislation of the Union countries and informs the Supreme Eurasian Economic Council about the results. These and other issues regarding service receiver rights, confidence building for regulators, providers and receivers of services are on the agenda of the panel session of the Eurasian Week. This platform will provide us with a feedback from entrepreneurs of the Union states, with more active interaction with business structures and will give impetus to integration too. â&#x20AC;&#x201C; This year anniversary for the integration. The main focus of the Forum of Eurasian Week in 2019 is to sum up the results of the first five years of the Eurasian Economic Union. What are the main achievements of this integration in your realm? â&#x20AC;&#x201C; The Treaty on the EAEU launched new equal right labor relations on the integration area of the EAEU and ensured the formation of a single labor market with equal preferences for workers and their family members which makes for resources mobility and better employment level.

For example the citizens of the Union states are exempt from the limitations set by national legislation regarding the protection of internal labor markets, they donâ&#x20AC;&#x2122;t need labor permits or a patent. The workers and their families have the right to stay on the territory of any other Union states during the period of the labor contract or civil law contract. They can stay in any of the Union states without registration up to 30 days since the day of entry. The workers of the Union avail of national tax regime, medical treatment, statutory disability insurance. Education documents are recognized automatically in any Union county. However there are still untapped opportunities of integration and the Commission is working on the matter. For example almost competed is the draft Agreement on provision of pensions in the Union member-states. Once it is approved the workers will be able to form, keep and implement their pension rights on the territory of the Union states which will lead to positive dynamics in labor migration within the Union and will provide the workers with better social protection.

In order to recognize academic degrees and titles of the workers we are working on an international agreement on mutual recognition of such documents. Currently in progress is the creation of digital services for information and technical interaction between the players o single labor market regarding employment of the EAEU citizens. For financial sector we have worked out a draft Concept for single market defining targets, stages, criteria and main areas including better availability and quality of financial services, growth of the financial sector and stronger competitiveness. In 2016 the Agreement on information exchange in financial sector came into force, while 2018 was marked by the Agreement on harmonization of legislation on the financial market and a draft of the Plan of harmonization which defined the procedure and time limits for the harmonization of regulations and requirements set by legislations of the Union states. There is also a draft Road map to form a Single exchange space in the Union including the logically connected elements necessary for an effective work of a forex exchange. For a start we have prepared a

draft Agreement to allow brokers and dealers of one Union state to the trades at the exchanges of other Union states. This document will entrust national exchanges with the right to recognize the licenses of brokers and dealer issued in other Union states and will ensure their direct participation in the trades. At the same time there is a draft Agreement of securities placement and trading in the Union states aiming at freedom of securities emission and trading. As for monetary policy we continue working on harmonization and liberalization of legislation in the sector. Pending is the draft Agreement of coordinated approaches to monetary legal relationships and liberalization measures. This will allow our citizens to open accounts without limitations in foreign and national currencies in the banks of other Union states. We have defined a list of transactions which will not be limited to ensure the freedom of money flow of residents. At the final stage is the draft Agreement of information exchange regarding credit records which will allow the banks to assess borrowers’ status from other Union countries. An important factor for a single market is the coordination of tax policies and administration. So we work on simplification of VAT, better tax administration with the use of information tech-

nologies to facilitate export procedures and VAT return to business. Almost completed is the draft Agreement of audit within the Eurasian Economic Union which implies the right of any citizen of a Union state to receive audit service without limitation and exemption with the recognition of qualifications and audit reports. Intellectual property is also in focus. Authorized bodies of EAEU memberstates and EEC coordinate their work to harmonize compliance practices, to improve measures to combat infringement products. The Union states follow a coordinated management scheme for authors’ rights and neighboring rights on a collective basis to create trustful legal relations between right holders and such organizations. We have completed the legal framework for the mechanism of single customs register of the intellectual property items. In the nearest future it will be possible to apply online in personal accounts on the Union’s website. In process is the system of registration of brand names of the Union and places of origin of the products implying legal protection in all Union member-states simultaneously. For entrepreneurship promotion there is an effective mechanism of participation of business community in the formation of supra-national regulations

About the author Zhaksylykov Timur Mekeshevich Т. Zhaksylykov was born on September 17, 1968. In 1993 he graduated from M.V. Lomonosov Moscow State University. In 1997 he graduated from the Institute of Political Studies, Strasbourg (France) with Master’s degree in the field of European studies. In 2003 he graduated from Kazakhstan Institute of Economics and Finance with a degree in “Economics”. He worked in the Administration of the President of the Republic of Kazakhstan, in the Ministry of Industry and Trade of the Republic of Kazakhstan, in Akimat of Astana. From February 2012 to April 2017 he held the position Vice-Minister of Economic Development and Trade of the Republic of Kazakhstan, Vice-Minister of National Economy of the Republic of Kazakhstan. From April 2017 he was appointed to the position Member of the Board – Minister in charge of Economy and Financial Policy of the Eurasian Economic Commission.

within the Union. The mechanism was introduced in 2015 and implies regulation effect assessment (REA) for the EEC draft decisions which are able to influence business.

Meeting of Advisory Committee for Social Protection Moscow, Russian Federation, EEC Headquarters, May 23, 2019

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EAEU: TODAY AND TOMORROW

Meeting of Advisory Committee for entrepreneurship, Moscow, Russian Federation, EEC Headquarters, June 13, 2019

REA is very popular judging by the received ideas, amendments during the EEC discussions from representatives of business and experts as well as by the high per cent of their introduction into the final EEC documents. Since the launch of REA 296 EEC draft decisions were discussed with 7.5 thousand amendments and observations and 5 000 of them taken into account when working on a document, the share of accounted amendments from business is 63%. In the Business Development Department of EEC the share of REA is even higher and excesses 75%. Besides the REA procedure is also implemented into the work on technical regulations of the Union which is very important for business. REA is being improved these days. For example this year the Eurasian InterGovernmental Council has assigned to launch a pilot project to assess the actual effect of EEC decisions leading to overall assessment of the whole range of regulations within the Union. â&#x20AC;&#x201C; You have said several times that it is necessary to raise the effectiveness of interaction between the EAEU member-states within the single service market. What steps should be taken

here and how can the Forum assist in this matter? â&#x20AC;&#x201C; To raise the effectiveness of interaction between EAEU states within the single service market firstly there should be a non-barrier space for business of the Union. Such space provides access to service markets of the Union states without extra requirements, licenses and other permits due to mutual recognition of national permits and professional qualifications of service provider personnel. This as well as other conditions are provisioned by the rules of single service market. Besides the single service market facilitates the development not only of large corporations but SME as well. Small and medium companies fall behind transnational corporations which use modern technologies, whose global networks, financial resources are sometimes equal to GDP of separate countries. The rules of single market decrease bureaucracy and simplify the criteria of the Union market access. We believe that such instrument as implementation would be very useful. The EU experience is interesting in this regard when national measures should be taken in accordance with the European instructions in the service sector.

The implementation of the Treaty on the EAEU and the decisions of the Supreme Eurasian Economic Council in service sector will lead to effective work of single market, guarantee legal stability and become one of the ways to harmonize legislation of the Union states. Another way to create non-barrier space is the activity of the Commission to remove the existing obstacles and to prevent new ones. Taking into account that today services are in every aspect of life the removal of barriers will allow to solve problems of relevant sectors of economy. At the same time the exemption of business from cumbersome procedures is an additional guarantee to ensure freedom of services flow. Secondly there should be more service sectors covered by the rules of single market. Larger number of service sectors will raise the effectiveness of the single service market and bring more advantages to the service providers and receivers. Business requires lower costs and finds this opportunity on the single service market. Today there are two ways to extend the single market: removal of segmentation of the sectors included into the list of services of the single market, and the

implementation of the approved liberalization plans. Both ways develop the single service market and gradually involve new service sectors where the Union states are ready to provide more rights and freedoms to economic entities. Thirdly there should be more confidence in the single service market among all its players based on transparency and integration of the service market, information exchange between regulators, service providers and receivers, better regulatory. Rules for the regulation of trade in services, incorporation, and activities are already in force. They define how the Union states improve their business regulation ensuring transparency of new and current regulation instruments. According to the Article 68 of the Treaty on the EAEU we conclude agreements of administrative cooperation first of all in the sectors of single market and those which are liberalized with regulators and information for exchange. Such interaction of the Union authorized bodies ensures tax and other obligations of the service providers and receivers, ensures statistic data and prevent unfair business. These steps will allow to create a firm basis for transparent and effective introduction and application of the rules of single service market. Fourthly there are challenges regarding consumer rights protection from unfair market players.

Meeting of Advisory Committee for Intellectual Property Moscow, Russian Federation, EEC Headquarters, March 6, 2019

We believe that this task can be solved by interaction of authorized bodies of the Union member-states when carrying out the monitoring, administrative and procedural actions. Such approach could provide guarantees and comfortable conditions for the fair market players as well as dismiss some fears of national regulators regarding consumer rights protection. Same mechanism of single market improvement works in the European Union. All these measures will give a new impetus to the work and expansion of the single service market.

The final target of the effective EAEU single service market is to provide high quality services, to stimulate investments to the service sector and to develop integration. And business society of our countries plays the main role in the formation and work of the single service market. With this regard we hope for the proactive position expressed in the participation when revealing problems of the single service market including entrepreneurs inquiry and their appeals to the Eurasian Economic Commission.

Meeting of Advisory Committee for Social Protection Moscow, Russian Federation, EEC Headquarters, May 23, 2019

E U R A S IA N FIN A N C IA L & E C ONOM IC H ER AL D | #3( 8) 2019

RSPP NEWS

BUSINESS COOPERATION PROVISIONAL RESULTS AND PROSPECTS

Alexander Shokhin,

President of Russian Union of Industrialists and Entrepreneurs

France has always been a focus area in the international activities of Russian Union of Industrialists and Entrepreneurs. We have long and very active relations with MEDEF and MEDEF International, with whom we created the Russia – France Business Cooperation Council. Our partner is also the FrancoRussian Cham ber of Commerce and Industry. An addi tional incentive to our already close cooperation helps to give an active dia logue, carried out at the highest level. Un der the patronage of the presidents of Russia and France, the Trianon Dialogue was created through civil societies, in which business associations of the two countries also actively interact.

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The Russia – France Business Cooper ation Council was founded on November 27, 2012 in Paris, under the protocol, signed between the Russian Union of In dustrialists and Entrepreneurs (RSPP) and MEDEF International, in the pres ence of the Russian Prime Minister Dmit ry Medvedev. CoChairs the Council are on the Russian side – Oleg Belozyorov, General Director of Russian Railways (since November 2015), on the French side – Frederic Sanchez, President of MEDEF International, Chairman of the Executive Board of Fives Group (since May 2018). The main goals of the Council are: the promotion of effective cooperation

between enterprises of Russia and France; expansion of exchange between business circles within the framework of bilateral events or specially created working groups; assistance in strength ening direct contacts and relations with state and private companies of each country; to advance of common inter ests of private sectors of Russia and France in government bodies of the two countries. An important step was the signature of a memorandum of cooperation be tween RSPP and MEDEF International in the field of the industry of the future in the context of RussiaFrance business di alogue at SPIEF2018 in the presence of the presidents of these countries. In April out first specialized bilateral forum was held, at which issues of coop eration in the field of new technologies were discussed. Groups of French and Russian experts discussed directions of technological and industrial cooperation, in particular in the area of digital tech nologies, additive manufacturing, au tomation, robotics, Big Data, IoT, as well as standardization and certification, transformation problems, ways to ensure industrial competitiveness and work globally on the French and Russian indus try. The meeting ended with the award ceremony "achievements of the industry of the future of France and Russia", in which Russian and French projects using an innovative approach in production were noted.

RSPP NEWS

On June 6, 2019, the second Russian French business dialogue took place within the St. Petersburg International Economic Forum, devoted to the practice and prospects of cooperation on the dig ital agenda. The digital economy today is not just a translation of analog forms into num bers but also a change in habitual busi ness models and lives of people as a whole. Such technologies as the Internet of things, digital design and modeling, re mote access and cloud storage, distrib uted ledger technologies, big data and artificial intelligence have already had an impact on business today. During our discussions participants – heads of companies, represented various areas of the economies of the two coun tries, focused on current projects and prospects for cooperation in the field of innovative technologies and digitaliza tion. The composition of the French del egation was impressed not only by the number but also by the comprehensive coverage. It presented a wide variety of directions, including banking, invest ment, transportation, engineering, ener gy, media, software, IT, consumer brands, real estate and much more. This compo sition, like a mirror, reflects a wide range of opportunities for fruitful interaction on a bilateral basis. Among advantageous directions and areas, we noted the following: Indus try 4.0.; climate and zerocarbon econo my; innovative technologies in traditional primary industries; new mobility (trans

portation management, including BlaBlaCar, multimodality, new modes of transport such as electro scooter); new types of engines including hydrogenfu eled; communication digitization intro duction of 5G generation; technological solutions based on artificial intellect for “smart cities”. Among actual examples of promising bilateral interaction in the area of cre ation new materials and technologies, the cooperation of companies Severstal FIVES, SeverstalTotal can be identified. The French company Orange is looking for a partner in the field of 5G genera tion, transmission and processing of large amounts of data. Such a form of cooperation as joint support for innovative startups is very promising. As an example: on April 15, 2019 in Paris (the Palace of Versailles), the Trianon Startups Business Forum was held, in which more than 20 resident companies of Skolkovo took part, who presented their projects to 15 French corporations, such as Air France, Total, Renault, Orange, Air Liquide, SNCF, Thales, Societe Generale, PernodRicard, Ipsen and others. The Forum was held under the aegis of the RussianFrench Trianon Dialogue in partnership with the Skolkovo Foundation, the FrancoRussian Chamber of Commerce and Industry, the Association of Advisers on foreign trade of France, French initiative French Tech Moscow and with the financial support of the Russian company ADV Advertising Group. It is planned to hold a similar

event with the participation of French startups in Russia for representatives of Russian business. On March 2019 the Head of the state with French companies, the largest in vestors in the Russian economy met in the Kremlin. The day continued with a landmark meeting as part of the Institut Choiseul initiative and a visit to Russia by a largescale delegation of young French business leaders. The ranking of young business leaders is a great project of the Institut Choiseul that does the work for the long run. This fact that it has gone beyond France and received support at the interstate level indicates his relevance, the commitment of countries to develop normal, mutually beneficial relations. The Russian project Choiseul 100 helps to sharp the future of bilateral economic communications be tween Russia and France, gives an oppor tunity to get to know each other, establish contacts, and better know the potential of each other. I count that this fits into perfectly with the objectives of the Trianon Dialogue, which we support to bring together our peoples. We actively advance the interaction in all directions. One of the most important tasks for us is to improve the business environment, investment climate. Here the representatives of French business, with whom we interact, including within the International Council for Cooperation and Investments, actively help us. Our last meeting was held with the participa tion of Sergey Lavrov in March.

Russian Union of Industrialists and Entrepreneurs

FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATION

V I M O S C O W I N TER N ATI O N A L F I N A N C I A L A N D EC O N O M I C

FORUM

2019

THE EURASIAN ECONOMIC UNION & THE EU:

SEARCH FOR NOVEMBER 22 NEW FORMATS OF COOPERATION MOSCOW

EURASIAN ECONOMIC COMMISSION

F O RM AT • Plenary sessions • Breakout sessions

SESSIONS O F T HE F O RUM Session 1. France – EAEU: prospects of investment cooperation Session 2. Gold-mining and jewelry industries– new opportunities and technologies Session 3. Innovation technologies as promising investment Session 4. Digital banking: from classical banking to financial ecosystems

+7 495 663-02-08/13/19 sgk@fbacs.com, s.arkhipova.fbacs@mail.ru, tkd@fbacs.com www.fbacs.com

WORLD TRENDS

GOLD IN THE CHANGING INTERNATIONAL MONETARY SYSTEM 18

GOLDHUB Enhancing trust in gold through data Credible data is critical to the informed investor, so we take pride in seeking to source the highest standards in the data we provide. Building on our existing data series, using data from public and commercial third parties, we have created a comprehensive information resource for gold as an asset class. Alongside data, our new website brings together our expert research and interactive tools in one accessible and easy-to-use location. The Goldhub research library gives you access to a wealth of material on the role, drivers and performance of gold as an asset class from industry experts. Whether looking for data analysis and context, the latest updates or a deeper understanding of the gold market, Goldhub is a rich resource to support strategic asset management. Visual analytics and data downloads also allow you to engage with gold market data, helping you to verify and develop your own insights. Usability, breadth of data and depth of knowledge make Goldhub equally relevant to asset owners with existing positions in gold and those who are new to the asset class. For the former, relevant data is readily available; for the latter, Goldhub provides information and guidance on gold’s value as a strategic asset. As the site develops, more data and insight will be added to provide even greater levels of transparency and understanding around the value of gold as an asset class. In March, we launched the Goldhub blog, which features market insights from our teams across the world, as well as external commentators who provide a unique perspective on aspects of the market.

“

The changing international monetary system Economic power is shifting from West to East. China is now the world’s largest economy on a purchasing-power parity basis. It is the largest trading nation in the world and has the third largest sovereign debt market. Over the last decades China has become a key driver of global growth and it will continue to propel the world economy over the years to come. The reconfiguration of the structure of the global economy and China’s rising global footprint is likely to have an impact on the international monetary system, with the greater use of the Chinese currency as one of the forces shaping the global financial system. The international monetary system is likely to move away from the unipolar, US dollar – based system towards a multipolar system, with not only the US dollar, but also the euro and potentially the renminbi playing the role of the main reserve currencies.

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”

Since 2009 the Chinese authorities have introduced a number of measures aimed at promoting renminbi crossborder settlements, including building an offshore renminbi market and facilitating access of foreign investors to the Chinese bond market. Since the inclusion of the renminbi into the SDR basket, the share of the renminbi in international reserves has surpassed those of the Australian dollar and the Canadian dollar and currently it stands at 1.95% (as of Q1 2019). The inclusion of Chinese bonds into the global bond indices earlier this year will provide a further impulse for investment into Chinese bonds and will further expose foreign investors to the Chinese sovereign bond market. The renminbi’s use in international trade will most likely increase further once certain conditions are fulfilled, most notably those regarding the currency convertibility and the continued opening of China’s capital account. The real question is not whether this

Dr Tatiana Fic, Director, Central Banks and Public Policy, World Gold Council

will happen, but when and what regions are likely to adopt the renminbi as one of their main reserve currencies. While it will be difficult for the renminbi to rival the US dollar as the global currency, Asia seems to be the natural habitat for the renminbi (Eichengreen, Lombardi, 2017). As the international monetary system transitions from the unipolar, towards a multicurrency system, gold, as a safe haven asset and a hedge against financial shocks and currency crises, has remained and will continue to remain an important element of central bank portfolios.

Recent trends in central bank gold buying Over the past decade, central banks have purchased more than 4,300 tonnes of gold, bringing their total holdings to nearly 34,000 t. Following the USD and EUR, gold makes the third largest reserve asset in the world, constituting

WORLD TRENDS

about 11% of world’s international reserves (chart 1). Since the global financial crisis central banks have remained firmly on the gold purchasing pedal, with central bank gold demand fluctuating at about 500-600 tonnes per year (chart 2). Last year central bank purchases of gold totalled 651 tonnes – more than at any time since the end of Bretton Woods and the suspension of US dollar convertibility into gold nearly 50 years ago. The vast majority of buying has come from developing country central banks. Russia, China, Turkey and Kazakhstan have been the largest purchasers. The share of gold in developing country central banks remains relatively low. The overall allocation is 5% as compared to 16% for advanced economies which may suggest there is scope for further growth. At the same time, over the past decade the advanced economy central banks stopped selling gold under central bank gold agreements. Earlier this year, they decided not to renew the agreement upon its expiry in September 2019. In the press release issued by the ECB in July, 22 signatory central banks confirmed that none of them currently has any plans to sell gold. The signatories stated that gold remains an important element of global monetary reserves. While the developing country central banks have been active purchasers, the pattern of demand has changed in recent years. In 2016, demand was highly concentrated in Russia, China and Kazakhstan (chart 3a). By 2018, the demand had become far more diverse, with nineteen individual central banks buying over one tonne of gold last year, according to IMF data. Countries that had been absent from the gold market for many years became notable buyers of gold. The European Union re-emerged as a net buyer, after substantial purchases from Poland and Hungary (Chart 3b).

Chart 1 Foreign currency reserves and gold

Source: IMF, World Gold Council

Chart 2 Annual central bank demand 800

Tonnes

600 400 200 о –200 –400 –600 –800 1971

1976

1981

1986

1991

1996

■ Net purchases

2001

2006

2011

2016

■ Net Sales

Source: Metals Focus, Refinitiv GFMS, Worid Gold Council

Chart 3а Central bank purchases in 2016 Tajikistan

2,0

Colombia

2,3

Mauritius

3,5

Belarus

4,2

Qatar

2016 (Approx. 337 tonnes by 8 central banks)

7,5

Kazakhstan

36,2

China

80,2 200,7 tonnes

Russia 0%

10%

20%

30%

40%

50%

60%

Factors driving central bank gold demand Central banks hold gold for various reasons â&#x20AC;&#x201C; as a strategic asset, to satisfy their objectives of ensuring international reserves liquidity and security, and to diversify their reserve portfolios. Gold is especially well suited to central bank reserve portfolios whose principal function is to protect the country against external shocks. The negative correlation of gold with other assets allows central banks to maximise the return on their portfolios, at the same time minimising the risks. The recent increase in central bank gold demand has been driven by a combination of macroeconomic and geopolitical factors, as well as structural changes in the global economy. Macroeconomic uncertainty resulting from deteriorating budget positions, and rising debt of some of the reserve currency countries, an increased threat of currency wars, and protectionist policies have prompted central banks to diversify their portfolios. Some of the central banks buy gold at the same time reducing their US Treasury holdings. The dedollarisation of reserves is a response to sanctions and increased political tensions. Some central bank purchases reflect a desire to hedge against future changes in the international monetary system. It is noteworthy that most of the recent gold purchases have been coming from countries with strong trade and invest-

Chart 3b Central bank purchases in 2018 2018 (Approx. 544 tonnes by 19 central banks)

Serbia

1,1

Malaysia

1,2

Guinea

1,3

Qatar

1,6

Philippines

1,6

Egypt

1,9

Colombia

2,5

Kyrgyzstan

4,2

Iraq

6,5

Tajikistan

6,7

China

10,0

Mongolia

14,4

Uzbekistan

18,7

Poland

25,7

Hungary

28,4

India

42,3

Kazakhstan

50,6

Turkey

51,4

Russia 0%

10%

20%

30%

40%

274,3 tonnes 50%

Source: IMF, World Gold Council

ment links with China in Southeast and Central Asia (chart 4). The rising exposure of the Belt and Road countries to China will likely result in higher holdings of the Chinese currency in their central bank reserves in the future. As the process of full regionalisation of the renminbi will take

time, these countries have been purchasing gold instead. As the shift to a new international monetary system could be both destabilising, due to hot money flows and changing expectations, and possibly weigh on the US dollar, gold can serve as a hedge against both. Chart 4

Central bank gold purchases over recent years (2014â&#x20AC;&#x201C;2018)

Source: Metals Focus, World Gold Council

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SUBJECT FOR DISCUSSION

Alexander Murychev, Chairman of FBA EAC Coordinating Council, Executive Vice-President of RSPP, Chairman of International Banking Council, Member of the National Council under the President of the Russian Federation on professional qualifications, Chairman of the Council for professional qualification development

THE DEVELOPMENT OF THE SYSTEM OF INDEPENDENT QUALIFICATION ASSESSMENT ON FINANCIAL MARKET AS IT IS WELL KNOWN, THE PRESIDENT OF THE RUSSIAN FEDERATION V. PUTIN HAS ENTRUSTED THE RUSSIAN GOVERNMENT AND THE RUSSIAN SOCIETY WITH A TASK TO ENSURE A BREAKTHROUGH IN THE SCIENTIFIC AND TECHNOLOGICAL AS WELL AS IN THE SOCIAL AND ECONOMIC DEVELOPMENT OF THE COUNTRY, TO IMPROVE THE STANDARDS OF LIVING OF THE POPULATION, TO CREATE COMFORTABLE CONDITIONS FOR THEIR LIVING AND OPPORTUNITIES FOR SELF-FULFILLMENT AND TALENTS IDENTIFICATION OF EVERY HUMAN. Meanwhile personnel gap considerably limits the development of business in Russian regions: 68% of employers with large-scale projects on competitive markets up to 2025 consider the lack of qualified personnel as the main back-set on the way. Besides 82% of Russian companies in the high-tech sectors of economy have to educate additionally the graduates they hire. The adaptation period of the “green hands” is about 1.5 – 3 years. And the gap between the education base and the necessary skills at work is quite big. About one third of the graduates don’t work in their degree field, moreover every fourth graduate works in the areas where higher education is not necessary at all. On the one hand the graduates meet different challenges when looking for a job, on the other hand 91%

of employers are not satisfied with their skills. The reason for this situation is that the education system doesn’t coincide with the needs of the labor market – neither in the number of graduates, nor in their training quality. The expenses to overcome the skills deficit are charged to enterprises. Consequently national goals can’t be reached without modernization of the system of professional qualifications which is priority area of the state policy. In order to create and develop the system of professional qualifications in Russia the President of the Russian Federation signed a Decree #249 dd. 16.04.2014 to establish the National Council under the President of the Russian Federation for professional qualifications (hereinafter – National Council).

In 2017 the Federal Law #238-ФЗ was put into force “On independent qualification assessment” (hereinafter – Federal Law #238), which includes the legal and organizational basis and the procedure of independent qualification assessment. According to the Law the independent qualification assessment implies a procedure to confirm that the qualification of a candidate goes along with the provisions of a professional standard or the qualification requirements set by federal laws and other regulations of the Russian Federation. The participants of the independent qualification assessment are: National Council; National agency for qualifications development; Council for professional qualifications;

Qualification assessment centers (QACs); employers; candidates. Ministry of Labor and Social Protection of the Russian Federation – as an authorized body. In order to define the goals and the main tasks of the national qualification system the National Council has approved a Road Map for the development of the national qualification system in Russia for the period up to 2024. Also developed is The Development strategy for national qualifications system up to 2030 (hereinafter – Strategy). Since the launch of the national qualification system 1233 professional standards have been worked out and approved; 1767 professional qualifications have been included into the registry, basing on them 840 packages of assessment means have been created; more than 300 QACs have been opened on the basis of leading Russian enterprises, and 27.6 thousand people have passed the independent qualification assessment procedure in these centers. The qualifications assessment is carried out in accordance with the Proce-

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dures approved by the relevant Decree of the Russian Government. The process itself has a form of professional exam, and after passing it successfully the candidates are presented with a state-recognized Certificate of a qualification, which form has been approved by the Ministry of Labor and Social Protection. For the assessment of qualifications of the financial market players under the decision of the National Council the Council for professional qualification development has been established (hereinafter – Council). The goals of the Council are the development of a system of professional qualifications on the financial market, the work on professional standards, the independent qualification assessment of the financial market players, professional and public accreditation of the main professional educational programs, programs of professional training and (or) additional professional programs. The Council is established on the basis of the Association of financial market players “Council for professional qualification development“ with 74 members. Today the members of the Council are representatives of the Bank of Russia,

the Ministry of Finance of Russia, the Federal Treasury of Russia, the Pensions Fund of Russia, RSPP, Association of Banks of Russia, the National Association of the FOREX players, The Financial University under the Government of Russia and other state bodies, educational organizations, professional unions and legal entities. The Council is authorized: 1) to monitor the labor market, to track new professions, changes in the names and the list of professions; 2) to develop, apply and update the professional standards; 3) to develop, apply and update the sectoral frame of qualifications and qualification requirements; 4) to arrange the independent qualification assessment; 5) to take part in the development of the state standards of professional education, in the update of the programs of professional education and training as well as in the accreditation activity for professional and public educational programs. The Council has branches in all federal districts of Russia, as well as commissions and working groups on every sector of financial market.

SUBJECT FOR DISCUSSION

Since its establishment the Council has approved 35 professional standards (19 are under development now), 97 qualifications and 68 packages of assessment means (28 are under development now). 47 QACs and 134 examination centers are entrusted with the rights to conduct independent qualification assessment in the financial market sector. 1071 people have passed the assessment. 854 experts have been trained for qualification assessment. An important point in the development of the qualification assessment system in the Russian Federation was the coming into force of some provisions of the Federal Law #238 implying the changes in the procedure of qualifications assessment for financial market players and the shift to the independent qualification assessment. Today there are a number of requirements to the financial market players: education level, work experience, qualification certificate of a financial market player, and it must be valid. Such requirements are stipulated by several facts. For example, the financial market has a very complicated system and an advanced, dynamic regulation as well as peculiarities in every type of professional activity on the securities market. The clients of the professional players entrust them with their financial assets so the professional services for clients is an important condition for keeping this confidence. During the preparation of the shift to independent qualification assessment for financial market players the Bank of Russia and the Council signed a cooper-

ation agreement defining the joint efforts for the harmonization of the existing appraisal system for financial market players and the shaping national system of the independent qualification assessment. In April, 2019 the Road Map was signed to ensure the shift to the system of independent qualification assessment for the financial market players in the Russian Federation for the period 2019â&#x20AC;&#x201C; 2021. The Road Map includes strategic trends of the system development. For example, the development of the instruments for the professional and public appraisal of educational programs, the automation of the assessment process, the international recognition of the certificate of the assessment.

In order to improve the effectiveness of the professional qualifications system in the area of financial monitoring (AML/CFT) a cooperation agreement was also signed between the Council and the Federal Financial Monitoring Service. It is worth mentioning that according to the Decree of the Government of the Russian Federation # 584 dd. 27.06.2016 the professional standards starting from January 1, 2020 will become obligatory for the public or municipal agencies, public or municipal unitary enterprises, state-owned corporations, state-owned companies and business entities with more than 50% of state-owned shares. With this regard the Council has started to work out the methods and procedures of independent qualifica-

tions assessment in the state-owned corporations: it appears that the market should have the alternative and the independent qualification assessment can be carried out not only in QACs but in the corporations directly through creating their own QACs. Within the cooperation between the EAEU member-states the Council together with partners promotes the contingency of qualification requirements for the financial market players in these member-states. In accordance to the Treaty on the Eurasian Economic union dd. 29.05.2014 a single labor market implies a situation on a market within a specific sector where the citizens of the states of the economic union have the right for

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recognition of professional qualification of personnel. EAEU ensures free movement of goods, services, capital and labor force as well as coordinated, agreed and common policy in economic sectors. With this regard, considering the growing migration processes on the labor market of the Eurasian Economic Union and the arising need to mutually recognize the levels of workersâ&#x20AC;&#x2122; qualifications an issue is thrown into relief regarding the cooperation in unification of requirements to the training and assessment of labor resources of financial markets in the EAEU member-states. This leads to the need of analysis of the qualification market and the existing regulatory requirements to them, the need to work out the methods unifica-

tion of qualification requirements to financial market players within the Eurasian Economic Union, to create a single qualification frame and to implement the program of mutual qualifications recognition based on the methodology of national qualifications unification. Speaking about the Development strategy of national qualification system on the whole, its implementation implies certain results for all parties of the process. For the state: to ensure the human capital growth of the country, to compensate the negative demographic trends related to aging of the most part of workers and decrease of the number of working force; to maintain the supply and demand balance of qualifications on the labor market, to raise the effectiveness of education institutes at all levels; to raise the investment attractiveness of the subjects of Russian Federation, to improve the quality of labor force via attraction of qualified labor migration. For employers: to ensure the access to qualified labor force, to decrease costs on employment and qualification confirmation, to ensure human resources potential providing for technological innovations. For citizens: possibility to gain advanced qualifications and high economic returns on them; the possibility to constantly improve qualification and get new ones via lifelong learning, to build career via NSK institutes and the possibility to extend professional mobility. In conclusion it is worth mentioning that the qualification assessment system is still in its initial stage. However there is hope that the main goals of the Strategy will be achieved.

FOUNDERâ&#x20AC;&#x2122;S PAGE. FBA EAC

FORMING A SINGLE LABOR MARKET ON THE TERRITORY OF EAEU VIA QUALIFICATION RECOGNITION ON MAY 24, 2019 FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATION WELCOMED IN ITS HEAD-QUARTERS IN MOSCOW THE EXTENDED MEETING OF SUPERVISORY BOARD AND COORDINATING COUNCIL. THE MAIN ISSUE ON THE AGENDA WAS THE FORMATION OF A SINGLE LABOR MARKET OF THE TERRITORY OF EAEU VIA QUALIFICATION RECOGNITION. AMONG OTHER ISSUES THE AGENDA COVERED INTERACTION WITH THE STATE MIGRATION SERVICES, CURRENT PROBLEMS WITH QUALIFICATION RECOGNITION WHEN SPECIALISTS OF DIFFERENT PROFESSIONS FROM EAEU COUNTRIES GET A JOB IN RUSSIA, AND ALSO THE METHODS TO HARMONIZE QUALIFICATIONS OF SPECIALISTS IN DIFFERENT AREAS.

Today the work of the Eurasian Economic Union (EAEU, Union) has ensured the extension of four freedoms and a coordinated and single policy in these areas. The freedoms are well known: freedom of movement of goods, services, capital and labor. The last one is under special attention at this stage of integration, and the Treaty on the Eurasian Economic Union (the Treaty) has set a number of considerable preferences for citizens of the EAEU memberstates in their work activity and their stay on the territory on this or that state during their work. In general, today the labor market within the Union has already been formed and is working which is one of the important results of the Eurasian Economic Commission (EEC) taking part in the process. Statistics confirms this result. For example the flows of labor migrants from the Republic of Armenia and Kyrgyzstan to the Russian Federation as the main host country, grew by 10% in the first year of their membership in the Union. Later these flows settled down and are currently at a level higher than the one before their membership in the Union. Unemployment level has also decreased: according to the International Labor Organization in 2018 the unemployment level in the Union on average was 4.9% among active population. Wages and welfare of the EAEU population gradually grow. At the same time there are still some problems in the area. For example Ruslan Taran, President of International social and labor fund of migrants from Moldova said that legal base should be priority. Besides he believes that all workers of EAEU should have guaran-

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teed rights for pension coverage regardless of the place of work and living. R.Taran also touched upon the issue of crossing the borders and the migration legalization which can be solved if the migrants have the possibility to define their status in a host country before going there, while they are at home. He also reminded about the informal channels of employment which is a convenient and beneficial for an employer “mechanism allowing to put the migrants beyond the law and deprive them of rights”. In order to solve the abovementioned problems the President of International social and labor fund of migrants from Moldova offers to open regional offices closely connected with the center. The core task of the offices and the center will be “to protect the rights of migrants, to provide them with necessary information and to combat the lack and unreliable information and measures to sipmlify all stages of migration: entrance, movement, acceptance of migrants, medical care, permission to transfer money home legally, within interstate agreements”. Considering these facts the main task is to ensure social and labor rights of the workers. This task is priority for the EEC. Once it is completed the citizens of EAEU can practically see the advantages of migration processes. That is why currently the work of the Commission aims to create conditions for further development of the single labor market and to implement the existing preferences and interaction of authorized bodies. The head of the labor section in the Labor Migration Department of EEC Chinghis Sarybaev told about some ar-

eas where the work is carried out together with the Union member-states: “First of all we hope to carry out, via an electronic single integrated information system, the cooperation provisioned by the Treaty of pensions coverage - regarding the employment period confirmation in the EAEU memberstate, job appointments, payments and pensions export. To improve the legal protection of the citizens the Commission offered to provide the workers with long-term work contracts (over one year) and to their families with a special status assuming extended rights when crossing the border of the EAEU member-states, onetime registration procedure, access to self-employment”. Single labor market is a space not only for workers but also for entrepreneurs. Thus the market is also improved by such provision of the Treaty as the prohibition to deteriorate the terms of business. Accordingly the states of the Union and the EEC are not authorized to introduce new and discriminating limiting measures to the residents of member-states, moreover they are obliged to preserve and improve business terms, to ensure stability of access to the market and non-application of any new permissive qualification criteria and procedures which cancel business advantages. Besides with regards to the services, investments and any other activity the Treaty provides for more than 30 protective standards for entrepreneurs for example a full-fledged national regime and the most favored national treatment, non-applicability of quantity and investment limits, guarantee of protection and stimulation of investments, further liberalization and transparency of inner regulations.

FOUNDER’S PAGE. FBA EAC

Valery Zakharov, the Head of the Section of Entrepreneurship, Services and Investment in the Business Development Department of EEC spoke about the goals of the single market: “One of important changes in the Treaty is the possibility to work within the single services market. It is a priority and in many cases the basis for integration. The goals of the single market is to reduce prices and tariffs, to improve competitiveness and investment potential of the Union, to reduce costs of repeated permits, immediate recognition of licenses and allowances issued in other countries of the Union without recognition, immediate recognition of all qualifications of the services supplier without confirmation. Together with other instruments and protective measures the single services market totally overcomes national protectionism in the Union member-states. The Treaty dictates the necessity to introduce the best practices of national regulations as well as the change of regulatory model for a less overloaded one. With this regard for the first time at the supra-national level the rules of inner regulation were adopted aiming to abolish barriers and give guarantees to business and personnel of an easy notification qualification control procedure It is a basis for freedom of services and business. In its turn the Commission controls the rule implementation in the Union

member-states. On May 29, 2019 the Supreme Council was considering three decisions to convert several economy sectors into a single market format. The movement of individuals is also worth mentioning. It relates to the guarantees of movement of the personnel of a service supplier. It means there can be no limits of recruitment at all, except for the sectors with qualification criteria. But in this case anyway there can be no discrimination of the personnel of a service supplier depending on his/her citizenship”.

However one should realize that the formation of a single market can’t be successful without the most important point of this process – qualification recognition of workers. The Union assumes the following here. The workers have the right for professional activity in accordance with specialty and qualification in their education certificate, decree in the state of employment. In accordance with the Right of the Union the education documents issues in the Union member-states are recognized without any procedures.

Excluding such areas of education as teaching, law, medicine and pharmaceuticals as well as decrees and academic status which need legalization and recognition. The harmonization of education programs for personnel training are being discussed and have positive examples. Following the round table with representatives of the Union memberstates on the training of pharmaceutical specialists professional standards in this area were approved which facilitates mutual recognition of education docu-

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ments in EAEU countries. Also actively discussed is mutual recognition of jewelry countermarks together with the Russian State Assay Chamber under the Ministry of Finance of the Russian Federation and the Association of jewelers of Armenia. Ch. Sarybaev added: “Currently the Commission is also working on harmonization of qualification criteria regarding the main professions of drivers in EAEU member-states. It is suggested to set common criteria of the procedure of the drivers assessment, documents recognition and to entrust the Council of EEC with the rights to set qualification requirements. In case of success it will be possible to initiate the issue of imposture on EEC the right to define qualification requirements for other professions as well. As for the system of independent qualification assessment which is being introduced in Russia and is optional for now, there is one to be mentioned. It seems that in the conditions of a single labor market the system should be applied to the workers of other countries of the Union with the same procedure and terms as to its own citizens, and it shouldn’t be used as a protection instrument of the national labor market. Considering that the system of qualification confirmation is also being developed in other EAEU member-states aiming to improve productivity, workers safety and quality one should remember about the harmonization of the implemented systems for the future direct recognition of qualification documents of the workers”. Thus, in general positive dynamic can be seen in this process. However

there are still a number of questions to be solved: the issue of cooperation of member-states with regards to gradual qualification conjunction for different professions is being solved but is still on the agenda. This was pointed out by Samvel Chzmachian, Deputy General Director of FBA EAC, Head of Representative office in the Republic of Armenia: “One should take into account that while regulating different aspects of economic integration, enactments the level of professional training of the workers are concerned to this or that extend. For example the creation of a single financial market demands mutual recognition of licenses of its professional players and specialists. One of the licensing terms is the compliance of the financial market players with common requirements. Thus creating a single economic space the legislation indirectly influences the labor market of EAEU member-states”. Another important issue was tackled by Evgeny Tarakanov, Director of Association “National Migration Center” – the issue of professional training of migrants. He mentioned that for example the Russian Federation hasn’t got a system of professional training and retraining for migrants, and quite а large market of educational services is not focused on migrant education as a special target segment. In most cases additional education is not a very popular service among labor migrants, at the same time statistics shows that more than half of them needs and wishes to study. As we can see the harmonization of legislation and integration within the EAEU is not an easy process. There is active work towards free labor force movement aimed at integration but in order to reach the Unions goals it is necessary not only to intensify the existing agreements but also to solve the tasks conceptually. EAEU Business Council has jumped with two feet into gradual harmonization of different qualifications in EAEU member-states. For example together with EEC it is working on a Commission under a relevant Advisory Committee or a work (expert) group to promote this project. The main thing is that there is already a Work group on harmonization of different qualifications in EAEU memberstates under the EAEU Business Council. Andrey Bespalov, the Head of the Work group under the EAEU Business Council, Chairman of the Coordination Council of the Eurasian Human Resources Center spoke about the tasks of the group:

FOUNDER’S PAGE. FBA EAC

“The Eurasian Human Resources Center has expressed its support to the single labor market several times. First of all we are grateful to FBA EAC and EEC for the relevant Work group under the EAEU Business Council. On March 13, 2019 the Presidium of the Business Council authorized the Work group to carry out its functions such as to attract specialists, experts, create project groups, request necessary information and provide it. The Provisions of the Work Group and its composition have been approved. Now all five countries are represented in the Group, three representatives from each country, and some approaches have been developed. The name of the Work group reflects its goals and tasks which are to harmonize the mechanisms of access to single qualification criteria, to promote the mobility of labor resources and in general the task to create a single labor market. The mobility in the world gradually grows. 230 million people annually move crossing the borders of their states. According to some estimation in Europe the number includes the population of Belgium and Austria. On the territory of the Russian Federation 10-12 million migrants are present, which means that the migration processes involve about 7–15% of the economically active population. When we speak about a single labor market we realize that it is taken by an employer because the labor market is a market of supply and demand. And interaction with an employer, with migration services, employment services is a priority in the activity of the Work Group since the users of the labor resource are the employers. And every

employer has the right to employ that part of qualified labor resources which in his opinion will be more useful for the company. Another important moment is the need to exchange only the qualified labor force since it created the basis for the national wealth and improves the economy. The trend is that in each of five countries a more qualified personnel enters than the one which exits. And the problem is that migrants take positions at least one step lower than the representatives of the title states. So there is no mutual enrichment with qualified labor force. And the exchange unfortunately usually involves non-qualified specialists and doesn’t develop any economy of the Union. Speaking about the documents the Work group uses in its activity they are well known. First of all it is the Treaty on

the Eurasian Economic Union which approved free movement of labor force. Article 96 of Part XXVI says that “member-states cooperate to harmonize the policy of regulating labor migration within the Union and also to assist in the organized enrollment and attraction of the workers of member-states for their work activity”, and also that “the cooperation of member-states’ in the area of labor migration is carried out by relevant authorized state bodies”. The Work group sees this cooperation in such forms as coordination of common approaches and principles in labor migration, information exchange, experience exchange, training, seminars and learning courses, cooperation within the advisory bodies. Another important Article of the Treaty is number 97. Is focuses on the right of employers to attract workers of

member-states without limitations on the national labor market protection, and with this regard education documents are recognized in the memberstates without any recognition procedures in the host country-member to the Union. Also important for the Work group are the Interstate Agreements and treaties as well as Lisbon Recognition Convention. As for the output of the Work Group we suppose it must be: the Method of qualification harmonization, the Method of single labor market monitoring and the Method of development of requirements to the future professions/ specialties. It is necessary to mention that the Eurasian Economic Commission participates in the activity of the Work group and in order to solve the tasks set by the Work group the role of the head organization in the process creating a single labor market can be played by FBA EAC. The areas of its support are: Cooperation with employers, business societies and executive bodies of the member-states of the Treaty; Harmonization of cooperation with specified committees of EEC when creating the mechanisms of practical tasks and projects management; management, logistics and organization of the work and projects of the Work group; participation in conducting of conferences, seminars about the EAEU labor resources. FBA EAC has an advantage as a head organization since it already possesses a network of QACs, representative offices in 20 countries of Europe and Asia and the administrative resource. A Eurasian labor exchange is also being registered (International Human Resource Center). As for the Method of qualification harmonization as one of the products of the Work Group it is a large and crucial aspect for the single labor market. Today it is obvious that such method is necessary, including for the financial and economic sector So what is the concept of the method? This issue was tackled in details by Olga Firsanova, Head of the Training Center for NSK development in finance and economy of Saint Petersburg State Economic University: According to the basic guidelines of science the methodology of such product should include certain principles, a conceptual construct, certain procedure to carry out the process of recognition (depending on the conditions or the lev-

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el of qualifications) of the documents, work experience and agreements between countries. Answering the question of the goal one should remember that it is the result of the use of the method. And the main results are supposed to be the following: Protection of the EAEU market from the inflow of non-qualified labor resource and the development of migration processes; Anticipated growth of the level of qualification training of labor resources of intellectual capital in EAEU which must happen naturally for the reason of qualification harmonization of labor resources from these countries; Closer interaction between an employer which is the main player on the market, and a candidate. There are examples already particularly if the European Union. And some

documents were analyzed in order to use this experience. First of all what is a qualification in the European Union? Is it an education document. Besides the professions are regulated and not regulated. The regulated ones are those which have certain requirements of qualification while non regulated ones do not require that. Every country of European Union decides itself which profession is regulated and depending on this candidates from other countries follow different procedures. This practice can be applied in EAEU as well. So how does a candidate act? He searches in certain data bases for his qualification and his profession and identifies if it is regulated or not. Further in these data bases a candidate can find organizations which consult and help with documents preparation and the

FOUNDERâ&#x20AC;&#x2122;S PAGE. FBA EAC

process of recognition itself, in case the profession is regulated. If not the candidate can decide himself and get a job without qualification recognition or after this procedure thus getting all the rights following the process and the positive decision. All this can also be applied in EAEU and in fact become the main method. Now a few words about the recognition process. There is academic recognition when it concerns education. Or there is recognition of qualification and professional education mentioned in the method which is being developed. Moreover there is recognition of different degrees. Completed recognition implies that a candidate come to a different country and gets a job without any additional procedures or obstacles. Part recognition means that the qualification level is not high enough. In this case compensatory measures appear. And in this are an employer can influence a lot. There are different compensatory measures: adaptation tests, probationary period or work experience (in Europe 36 years). After that a candidate gets an official document. And relevant bodies are involved in this process to accompany candidates from different professions. In the conditions of EAEU countries these bodies can be self-regulated HR companies. The main thing is the procedure of their cooperation with a candidate. Another important thing is standard professions. Standard professions mean minimum of labor actions, knowledge and skills necessary for a candidate to work in the country of his interest.

When the standard professions are chosen, the systems of labor actions for them are tasks it will be start of a very serious harmonization process. Besides it goes well with the goals for EAEU countries today including the task to create electronic base for professions. It will considerably simplify for an employer the search of labor resources and enrollment to a job. It is important that the aspects of qualification recognition and its challenges are not limited by the abovementioned ones. For example V.Zakharov speaking about qualification recognition stated that there will be lot of work to introduce the provisions of the Treaty

on the Union into the national legislations. Besides electronic work record books should be introduced in the countries of the Union. And one should already think of centralization and digitalization of this process. In conclusion I would like to say that the work on the single labor market including through qualification harmonization is being done actively and successfully; the process is visible already. So there are grounds for a hope that joint efforts will reach the goals and solve the problems in this area. Especially taking into account that the process is vital for all EAEU member-states.

PROFESSIONAL DEVELOPMENT AND ASSESSMENT OF SPECIALISTS OF SME SECTOR FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATION LAUNCHES AN EDUCATIONAL PROJECT “PROFESSIONAL DEVELOPMENT AND ASSESSMENT OF SPECIALISTS OF SME SECTOR”. Companies of small and medium business in the Eurasian Economic Union account for 18 to 41% of total GDP and are a target segment for most financial organizations and institutes. These organizations in their turn need a well-qualified team of experts who understand special features of this market segment and know how to communicate with its representatives. Our educational project allows to receive new and organize the existing knowledge and experience of specialists involved into the process of communication with SME. The educational process draws experienced specialists with long-term practical and methodological experience of work with SME. The project has a pilot program for credit specialists of small and medium enterprises better known on the market as “EBRD technology”, “technology of responsible lending” or “cash-flow base technology”. The program has four levels: Basic – for business development managers, credit analysts who start their career in the sec-

tor, and also specialists of financial and economic services for small and medium enterprises. Extended – includes details of analyses of business models with complex structures, reporting system and information processing as well as practical methods of financial and economic analyses. Individual – personal training in accordance with the knowledge and experience of a client, pays attention to the previously discussed issues and areas. Corporate – training for the personnel of an organization based on the programs valid in the organization, rules and regulations, with regards to the existing product range and target client. After the program a standard certificate is given. The students who have passed the test are allowed to take a qualification exam in the Qualification Assessment Center for financial market specialists in accordance with the professional standard “Specialist of corporate lending” with a standard certificate. If you are interested to enroll or want to join the teaching staff please contact FBA EAC.

Contact person: Denis Burov +7-926-322-44-96, bds@fbacs.com

Founder’s page. IBC Практика

EFFECTIVE INTERACTION OF SUPRA-NATIONAL AND NATIONAL DEVELOPMENT INSTITUTES AND COMMERCIAL BANKS: BEST WORLD PRACTICES A REGULAR MEETING OF THE INTERNATIONAL COORDINATION COUNCIL OF BANKING ASSOCIATIONS (IBC) WAS HELD ON MAY 17, 2019 WITHIN THE FIRST EURO-ASIAN FINANCIAL AND ECONOMIC FORUM ON THE PLATFORM OF KHORGOS INTERNATIONAL CENTRE OF BORDER COOPERATION (ICBC) “KHORGOS”. THE AGENDA WAS AS FOLLOWS: “EFFECTIVE INTERACTION OF SUPRA-NATIONAL AND NATIONAL DEVELOPMENT INSTITUTES AND COMMERCIAL BANKS: BEST WORLD PRACTICES”. THE MEETING ALSO COVERED THE REGULATION AND DEVELOPMENT OF FINANCIAL TECHNOLOGIES AND PROBLEMS IN THIS SPHERE AS WELL AS POSSIBLE RISKS AND SECURITY ISSUES. AFTER THE MEETING IBC MEMBERS AND PARTICIPANTS WERE RECOMMENDED TO USE THE MATERIALS IN THEIR PRACTICAL WORK AND INFORM CREDIT AND FINANCIAL ORGANIZATIONS OF THEIR STATES. SOME ASPECTS OF THE MAIN TOPIC OF THE MEETING CAN BE FOUND IN THE ARTICLES FROM UKRAINE, KAZAKHSTAN AND ARMENIA.

Bakhytbek Baiseitov, President of the Association of Banks of the Republic of Kazakhstan

KAZAKHSTAN:

DEVELOPMENT INSTITUTES AS AN INSTRUMENT OF THE NATIONAL ECONOMY In many countries practice has shown that market relations based on the principle â&#x20AC;&#x153;laissez faire, laissez passerâ&#x20AC;? related to the free (non-regulated) market economy can lead to disproportions in the economy. Considering higher risks especially in the post-crises period, business may be not interested in investing in long-term projects even necessary

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for the society. 750 development banks working all around the world are designed to eliminate these disproportions. These banks are not banks as we traditionally understand them. They are rather non-commercial financial institutes with a special status established under the decision of a government. They can issues loans, bank

guarantees, targeted grants for largescale socially important projects and carry out analytical and awareness-raising work. Today in Kazakhstan there are all varieties of development banks due to the challenges which the society faces and which demand solutions of the state and international community. For example

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diversification and modernization of economy extremely dependent from hydrocarbon extraction and mineral resources, economic integration with neighboring countries, overcoming global crises, solution of social and ecological problems. At first sight quite a big number of development banks in Kazakhstan should lead to their competitiveness for different projects. However it doesn’t happen because each bank has determined its role and uses its own approach to the promotion of sustainable development of the country. The government of the country can influence the activity of the Development Bank of Kazakhstan (DBK) and the Eurasian Development Bank (EDB) because it has considerable shares in their equity capital (100% and 23.8% correspondingly). These banks are relatively young (in comparison to international development institutes) however they have already gained reputation of the leading financial institutes on the post-soviet space. Another regional development bank on the territory of Kazakhstan is the Asian Development Bank (ADB). Since the Republic became a shareholder of the bank in 1994 the total amount of loans allocated to Kazakhstan has accounted for $ 3.6 billion. 41% of investments went to transport

and communications, 30% – to financial sector, 13% – to nature resources and agriculture. The latest sector is important for the banks as an instrument to combat poverty and raise the living standards because most poor people live in rural areas. Within the program “Drinking waters” (2002–2010) the government of the Republic of Kazakhstan borrowed $34.6 million in order to improve the living standards and healthcare in some selected villages. Kazakhstan belongs to Asia geographically but the country finds itself in the European economic, political and cultural space. So there is no wonder that the European Bank for Reconstruction and Development (RBRD) is active here. It was created in London in 1989 for economic support of the former socialist countries which had serious turbulence at that time. Regardless of its lofty mission its approach was pretty pragmatic: the bank works as a fund buying shares in companies with relevant level of corporate management and high development potential in the strategically important sectors of economy. EBRD has worked in Kazakhstan since 1993 and has invested more than $ 8 billion into the economy of the country. Current Bank’s portfolio in Kazakhstan amounts to $2.8 billion with 80% as projects of infrastructure,

transport, energy and natural resources. The rest 20% are allocated to the support for corporate, agricultural and financial sectors as well as SME. The development of private sector is one of EBRD priorities in Kazakhstan that is why its share in the Bank’s portfolio amounts to 50% and will remain large in the medium-term period. In general since 2014 for the support of SME and businesswomen EBRD has allocated 19 loans in six derivatives (Bank CENTERCREDIT, Forte-Bank, Bank Intesa, Shinhan Bank, microfinance organization “KMF” and microfinance organization “Arnur Credit”) for the total amount of 92.8 billion Tenge. Development banks can unite countries not only geographically but also by religion. The evidence is the Islamic Development Bank (IDB) founded in 1973 in Saudi Arabia and also working in Kazakhstan. Although ethnic Kazakhs are officially Sunni, most population follows secular traditions and doesn’t follow the rules of Islamic law. At the same time if the money received from IDB are used to the benefit of the country and do not lead to the obligatory islamization of the people one should welcome the work of this financial institute. The Bank has financed about 50 projects of transport infrastructure, healthcare and rural water supply. Just like with EBRD

a considerable share in the investment portfolio (31%) accounts for SME support through lending to commercial banks. Another development bank working in Kazakhstan is the International Bank for Reconstruction and Development – member of the World Bank group. Starting from 1992 the Bank has already allocated to Kazakhstan more than $4.5 billion for 52 projects with the largest share of investments (85%) accounting to transport infrastructure. In the last years the demand for foreign investments in the country has decreased so the IBRD has switched to the analytical, consulting and awarenessraising work. For example the Bank cooperated with the Kazakh government in the Program of joint economic researches. Previously the bank’s employees organized a training for rural citizens to develop business skills in nontraditional areas. In general the development banks in Kazakhstan reflect geopolitical situation in the country. They express interests of global players (Russia, EU, USA, Japan, Islamic world) which finance their activity. On the other hand their work in Kazakhstan is useful for its economy because the final goal of the countries-donors is to reduce risks and find the advantages of cooperation with Kazakhstan. For the country it means better infrastructure, better state and corporate management, development of alternative industries, integration into the international economic space. Among the development banks the main roles belong to DBK and EDB because they allow the government of Kazakhstan to define the agenda themselves and contribute into the sustainable development not only of the country but also the whole Euro-Asian region. The period when Kazakhstan was receiving considerable incomes from the high prices on energy products and raw products has passed. Global economic crises showed the weak sides of national economy and provoked thoughts about the future. The economy of the country needs diversification, new infrastructure, new leaders educated and able to implement innovations into life. This is why the work of the development banks becomes so crucial. They should not only re-assign the money but also act as a real trigger of sustainable development and international cooperation. With this regard the national development institutes come to the fore, those

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which were created by the government of Kazakhstan for further transformation of economy. Today all national development institutes are united under the National Management Holding “Baiterek” which acts as an operator of the key government programs of business development, industrialization and housing. The Holding “Baiterek” has a number of subsidiaries aimed at the main mission – to support sustainable economic development of the Republic of Kazakhstan and to achieve the goals of the “Strategy – 2050”. The Development Bank of Kazakhstan, KazakhExport, the Investment Fund of Kazakhstan, Kyzyna Capital Management and Kazakhstan Project Preparation Fund provide financing, insurance, leasing and advice to large enterprises. As for small and medium enterprises they can find support, advice and other services from such companies as DAMU and Qaztech Ventures. Housing Construction Saving Bank of Kazakhstan, Kazakhstan Mortgage Company, Housing Construction Guarantee Fund and “Baiterek Development” are focused on housing availability through the development of financing, mortgage loans, subsidy and housing rent. Development Bank of Kazakhstan and KazakhExport support the exporters while JSC “Naitional Agency for Technological Development” offers promotion to innovations. The most effective instrument of business development within state programs are the programs of DAMU which has a lot of different products and programs of financing for small and medium business most part of which is carried out together with second-tier banks. Within the State program of industrial and innovation development in 2015–2019 the Fund DAMU together with other institutes of “Baiterek” is involved as a financial agent and operator of the instruments of businesses support. The Fund DAMU is also a financial agent to implement and monitor financial support (backing of fee rates of entrepreneurs’ loans, business loans guarantee to banks) within the Single program for business support and development “Business Road Map 2020” and acts as an operator of education and advice within this program. The support instruments of the Fund are the following: 1) long-term financing of projects by DAMU via second-tier banks conditional financing;

2) backing of fee rates of entrepreneurs’ loans from second-tier banks via DAMU (including up to 10% of investment loans, up to 7% of current assets loans); 3) guarantee of second-tier banks via DAMU. Branches of the Fund work in all regions of Kazakhstan and have big experience of interaction with local entrepreneurs, social organizations and local executive authorities. The mission of the Fund DAMU is to take an active part in the sustainable development of micro, small and medium business in Kazakhstan via complex and efficient support instruments. In order to achieve its aim DAMU focuses its work on two key strategic areas: 1. Support and development of startups and working entrepreneurs – expanded financing of micro-business, development and implementation of support instruments for microfinance organizations and credit cooperatives, expanded range of financial programs of the Funds for MSME, raising of economic effectiveness of the supported MSME; 2. Sustainable institutional development of the Fund – raising additional funds, achieving of the set level of financial results, automation of business processes, better corporate level. In order to improve efficiency of information resources the Fund plans to use the Big Data technology. It will allow the Fund to segment the products and potential niches both to develop new demanded products and to promote current programs. In general, speaking about the cooperation between banks and development institutes, it is worth mentioning that the development institutes should not forget about their original mission – to promote national economy via its satiation with cheap resources directly and through banks. The commercial banks in their turn being private market players should know how to use these resources considering the risks. At the same time it is inappropriate for the development institutes to be involved into profiteering (for example ensuring liquidity) or to include in their strategic goals the participation in exchange market (like some of them do). In conclusion is it worth saying that we need more programs and products of support and financing from the development institutes in different sectors of economy and of course better terms and conditions in them.

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Elena Korobkova, Executive Director of Independent Association of Banks of Ukraine

UKRAINE:

AGRARIAN RECEIPTS AND FINANCIAL RESTRUCTURING: EXPERIENCE OF COOPERATION WITH INTERNATIONAL INSTITUTES The most effective cooperation of banks of Ukraine was with international financial organizations. Such a conclusion can be made by analyzing various projects in which Ukrainian banks interact with external institutions. The

usual interaction patterns of such organizations with domestic banks are used in all “target” countries and are well known – the provision of resources for lending to projects or enterprises of a certain type, industry, or

sharing credit risk with banks using various kinds of guarantee mechanisms. However, in Ukraine there are two projects that stand out from the “standard” series. They will be discussed.

The first project is agrarian receipts. In Ukraine as in many other countries, small and medium businesses are severely limited in their access to loans which are necessary for financing current activities and development. This is particularly bad for agricultural sector, the seasonal nature of which requires the accumulation of financial recourses for planting and harvesting campaigns. For two decades a temporary moratorium on sale of agricultural land has been operating in the country that is the land cannot be a guarantee. And small farms as a rule do not have other suitable property. To facilitate access to credit for small and medium-sized agricultural enterprises, that don’t have property for collateral and the project of agrarian receipts was launched. An agrarian receipt is a title document fixing an absolute covenant of the obligator which is secured by a pledge, to deliver agricultural products (commodity agrarian receipt) or to pay money (financial agrarian receipt) on the conditions specified in it. The key to the receipt is the future harvest. The prototype of the agrarian receipt was Crop Receipts that is successfully used in Brazil. The decision is based on foreign experience. The Ukrainian project was launched in 2011–2012, when Brazil’s experience in introducing a financing tool for farmers secured by a future crop was studied. On its basis, the concept of agricultural receipts was formed and a draft Law on agricultural receipts was prepared. In November 2012, the Law was adopted. Features of the concept are as follows: a simplified collection procedure (without a judicial stage); the creditor's right to harvest is “connected” to the land and does not depend on the change of the land user (lessee); the issuance, transfer and repayment of agrarian receipts is recorded in an electronic registry, part of the data of which is at free access (that is, the default on the receipt is public). Pre-drafting preparation was carried out in 2012-2014. A basic model of issue and circulation of agrarian receipts using the electronic state registry and a test version of the registry were developed. In 2014-2015 a pilot project in one of the areas was launched, first receipts were issued and redeemed. In 2016 the pilot project was expanded to four more areas. In the same year, for the first time, a bank took an agro-receipt. In 2017 the

pilot phase of the project was completed and since 2018 a full registry of agrarian receipts was launched, acting throughout Ukraine. In this period the regulatory framework was developed and harmonized, the procedure for enforced recovery and transfer of receipt from one creditor to another was worked off. The circle of banks, financing farmers using agrarian receipts was expanded. At all stages of the project, International Finance Corporation (IFC) interacts with banks and this interaction has taken place at several levels. A joint working group that works on draft regulatory documents, as well as recommendations on how banks work with agrarian receipts (the procedure for basis products, accounting recommendations) was created by the Independent Association of Banks of Ukraine (IABU) and IFC. Advantage of this approach is that IFC experts (including foreign ones) participate in the work as well as bankers of various directions (lawyers, methodologists, “sellers”, accountants). It helps to keep in eye important nuances, to make “working” legal mechanisms and identify the most crucial areas for improvements. A representative of IABU is also a member of Advisory Board of the project. Also IFC advises banks (individually) by the construction of a model of work and business-processes, offers risk assessment, portfolio management and training of staff. It should be noted that agrarian receipt is a new financial instrument and the continued success of its use depends on the formation of well understood and accepted practice. Therefore IFC accompanies all the first of its kind events – the first to issue of a receipt, the first repayment, the first transfer to a new creditor, the first default. By the way, IFC experts take advice the notary officers and executors involved in the process, prepare recommendations for them and for creditors. Moreover, IFC regularly holds information and training events for notaries, farmers and executors. Representatives of banks are involved in some of them. If we talk about the results, according to IFC 851 agro-receipts (360 commodity and 491 financial) were issued amounting to 257 million US dollars (150 million – commodity, 100 million – financial) for 2015-2018. At present 8 banks work with agrarian receipts (about 60 million US dollars have been financed). The overall dynamics is as follows: 2015 – 11 receipts for $ 2 million;

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2016 – 61 receipts for $ 15 million; 2017 – 110 receipts for $ 30 million; 2018 – 669 receipts for $ 210 million. In conclusion, there are constraints in the implementation of the project. A novelty of the instrument and thoroughly the lack of large-scale practice (especially negative) complicate the understanding of legal and operational risks by banks. The first real default of the debtor according to receipt in front of the bank appeared only in 2018. In addition, IAUB does not yet allow banks to evaluate an agro-receipt as acceptable bail that is banks are forced to overestimate their credit risk assessment or take an additional bond security. Suppliers of seed grain, fertilizers and others things are unfettered by strict banking regulation and can form more affordable approaches to financing their partners through agro-receipts. This has an impact on proportions of bank and commodity financing to agrarians using agrarian receipts. But in general, the positive dynamism can be noted for all market participants. The second project is Innovation. As a result of the crises of 2008–2009 and especially 2014–2015 a large part of loans in portfolios of Ukrainian banks was problematic (as a result – more than 50%). Loans to the corporate sector have made the greatest “contribution” to the total NPL portfolio. Generally, to restore of capacity to pay the potentially “live” borrowing enterprises banks agreed with them about restructuring – deferring payments, selling or replacing collateral, lowering the interest rate and even forgiving part of the debt. However large companies usually buy credit to several banks but restructuring with one lender is impossible of others continue to “tear” the borrower into pieces and block his activities in court. On September 1, 2015, the volume of such loans was estimated at 200 billion hryvnas (about 9,2 billion US dollars). The goal of the project is to create conditions for multicredit restructuring of financial debts when the borrower gives the opportunity to restore normal activities and solvency and creditors ready for restructuring are protected from aggressive actions of their competitors. The instrument became Kyiv Approach or Innovation is a procedure for voluntary extrajudicial restructuring of multi-creditor financial debt (only creditors – financial institutions can participate), which a debtor initiates and for which for a limited period (90 days with the right to extend for another 90 days)

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debt collection activities are suspended (moratorium). During the moratorium the debtor prepares a plan of restructuring, creditors involved consider it and make the final decision. If the restructuring plan is approved by the majority of creditors, the further occurs according to it. To initiate a restructuring, the viability of the debtor should be reaffirmed by independent experts who are selected on a competition basis. The project of Innovation is inspired by foreign experience. The point is that such problems of Ukraine are not unique and similar programs of voluntary (extrajudicial) financial restructuring were successfully implemented at different times in the UK (London approach), Austria, Turkey (Istanbul approach) and other European countries. Their experience, taking into account Ukrainian specifics, formed the basis of the Kiev approach. This specificity established the scope and complexity of the project. If the London approach is an unspoken set of rules pursuant of which is informally controlled the Bank of England then the Kiev approach is formalized as much as possible, not only principles but the procedure of the Kiev approach are detailed in the Law on Financial Restructuring, the framework agreement is approved by the IAUB and to manage system, follow the procedure restructuring and dispute resolution established special bodies. At the end of 2014 the idea of financial restructuring was presented in the IAUB by experts from the European Bank for Reconstruction and Development (EBRD) and the World Bank. On January 2015, the heads of the IAUB member banks decided to launch the Financial Restructuring Program, initiated by the National Bank of Ukraine. A draft laws was developed and in 2016 the law was adopted. Regulations have developed in parallel, approaches to the organization of the system of Financial Restructuring were determined. Next the structure of the Kiev approach was developed. The bodies of Financial Restructuring were formed: the

Supervisory Board (the work started at the end of 2016), the Secretariat and the Arbitration Committee. The Secretariat is a standing body that the implementation of restructuring procedures at all levels – from the adoption of the application to the approval of the restructuring plan. The Arbitration Committee solves disputes between participants in the restructuring. The law was conceived as a temporary (for three years) instrument to settle “pendant” debts of large companies to banks. At the same time, for a number of reasons the system of financial restructuring did not achieve the planned efficiency and the NPL level in portfolios of Ukrainian banks continues to remain above 50 %. Upon review the situation, proposals were prepared on the necessary legislative changes and the prolongation of the Law on Financial Restructuring for another three years. The project is implemented with the direct participation of the European Bank for Reconstruction and Development and its interaction with banks that is built through and on the basis of the IAUB. Moreover, the project is a unique example in terms of co-financing. The Independent of Association of Banks of Ukraine and EBRD (with the support of the World Bank) created joint working groups (involving a number of independent experts) who worked on the bill as well as the details of the framework agreement on restructuring. In particular, the focus of the working groups was the following issues: organization of the work of the Secretariat and the Arbitration Committee (requirements, obligations, rights, financing); methods and project appraisal procedures (criteria and procedures for the selection of experts, approaches to data analysis and determination of viability). Also banks within the framework of committees and working groups of the IAUB continue to work to improve legislation related to Financial Restructuring. The main working body is the Secretariat created on the basis of IAUB. Its work is co-funded by IAUB and EBRD.

Thus, IAUB member banks that finance the Association (pay membership fees) indirectly participate in co-financing of the Secretariat and supporting the project as a whole. Results of the project are as follows: the overall dynamics of the restructuring: 2017 – 8 billion hryvnia, 2018 – 19.5 billion hryvnia, 2019 (as of April 18) – 9 billion hryvnia. At the same time, 88% of the total volume of the procedures is debts to state banks. The restraining factor is the fact that the system of financial restructuring has been created for all existing banks and their corporate borrowers, but it is mainly used by state-owned banks. And most of the financial restructuring procedures carried out were initiated by borrowers of state-owned banks. The reason is the Law on Financial Restructuring opened up an opportunity for state banks that the private sector banks had without it – to restructure loans with deteriorating primary conditions for the bank (including deferred repayment, forgiveness of part of the debt, interest rate reduction, etc.) without guaranteed accusations of harm to the state. But numerous shortcomings in the system of protecting the rights of creditors actually became a counter-incentive for borrowers who did not want to repay debts and had many opportunities to avoid fulfilling their obligations. Why restructure if you cannot pay? In addition, clarification is required by a number of tax legislation norms and issues of coordination of certain issues in the framework of restructuring with the Antimonopoly Committee. Work on solving these problems continues. In general, financial restructuring is effective and the volume of settled debts is growing. However, the unrealized potential remains significant. The given examples clearly show that one of the most effective methods of project implementation are the implementation of global best practices, in which leading international institutions actively help Ukrainian banks. We hope such cooperation will continue actively and in the future which will make it possible to implement a number of effective innovations and reforms in Ukraine.

Samvel Chzmachian, Deputy General Director, FBA EAC, Head of Representative office in the Republic of Armenia

ARMENIA:

INTERACTION OF DEVELOPMENT INSTITUTES AND COMMERCIAL BANKS: BEST WORLD PRACTICES Today there are about 750 development banks in the world (without regard to the interstate ones), covering most countries with their activity. In large regions and countries a considerable share of the cumulative banks assets accounts for the development banks (for example in South Asia the share is 12%, in the Latin America – 10%, in Germany – 8%).

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The same can be said about the share of loans issued by national banks (in the Latin American countries it amounts to 30% on average). In many countries the development banks are often among the largest national banks. For example the German KfW has a permanent position among 10 largest banks of the country: cumulative banks assets of KfW group

overpass €350 billion; besides this bank is the fifth security issuer in Europe after the governments of Germany, Great Britain, France and Italy. At the same time, if we analyze world practices in establishing an affective system of development institutes – specialized state (quasi-state) corporations and companies aimed to eliminate

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barriers of country’s development (first of all institutional and infrastructure barriers) we will see that these development institutes do not always fit well into the national economic structure and in particular do not always cooperate with commercial banking of the country effectively. The Republic of Armenia also has such example with its negative experience of creating a national development bank - Panarmenian bank. Serious hopes were set on Panarmenian bank because it was created within the concept of “Armenian world” and was aimed to finance competitive projects developed on the basis of potential and knowledge of the local people and expatriates. Being one of the most ambitious financial projects of Armenia it was accompanied by the Law of the Republic of Armenia “On Panarmenian bank” and in 2011 the bank materialized as a Joint Stock Company with one shareholder – the Central Bank of the Republic of Armenia which allocated 7.5 billion drams (about 16 million US Dollars) to the equity capital of Panarmenian bank. However those expectations didn’t come true: during the years of its work Panarmenian bank didn’t manage either to raise money from foreign financial structures or investments from the Armenian community in the form of shares. As a result it was announced unadvisable for the state to participate in the structure, and in August, 2017 Panarmenian bank was transformed into an investment fund still not very active since then. Currently the government wants to abolish the relevant law. Nevertheless negative experience is also an experience to draw a number of valuable insights. Firstly the original idea to establish an ethnic development bank even considering a vast and active community seems a little bit restrictive. Secondly there was a breach of an essential requirement limiting the work of development banks – to avoid direct competitiveness with private financial institutes, commercial banks since such competitiveness suffocates their development and can become a source of financial crisis. After failing to raise money for the developing of infrastructure and other large-scale projects Panarmenian bank encroached upon the territory of commercial banks and started to finance small projects, to conclude repos with commercial banks and invest in government bonds. It is well known that the short-term segment of the credit market if one of the focus areas of commercial banks and

consequently the use of short-term credit instruments by a development bank leads to undesirable competitiveness with commercial banks. Thus Panarmenian bank sort of reflected a number of problems in the Armenian economy related to the effectiveness of management and reasonable allocation of money. In other countries which lack such problems due to a more effective government control the national development banks become the leaders of the banking system and the drivers of national economies. When speaking about the supra-national development banks in Armenia one can see that their field of activity is narrowing together with parallel development and diversification of national commercial banks. In particular there is a considerable growth of resources supply from the commercial banks of Armenia (which do not have any problem with liquidity) in the traditional segments of the development institutes – first of all in financing of infrastructure projects. This leads to stronger competitiveness. In 2018 the capital adequacy ratio of Armenia’s banking system amounted to 17.7% with the minimum set by the Central Bank being at the level of 12%. It means that commercial banks in Armenia have high capitalization, stable buffers and strong sustainability. Besides we see the change of the traditional paradigm of financing the investment projects for large corporate clients – a shift from bank financing of these projects to simpler and cheaper bonded loans. A couple of years ago the Central Bank of Armenia spiked the minimum regulatory capital requirement for commercial banks sixfold. Besides more active mergers and acquisitions and decrease of the number of commercial banks from 21 to 17 it provoked the problem of selling the greatly increased liquidity especially against numerous problems in economy with the deficit of healthy portfolios and high-quality borrowers. Consequently the commercial banks had to decrease the prices of their products and services and to hold back incomes. It relates both to mortgage loans and business loans. For example today the interest of mortgage loans in the national currency is 9%, in US dollars – 7%, in Euro– 6%. Moreover recently the Armenian commercial banks have proved their ability for complex deals and the consolidation of local financial resources to finance international deals whereas earlier only development institutes could do that. Thus three commercial banks in

Armenia jointly consolidated $40 million of credit resource. It allowed the company Charaat Gold Holding registered at London forex exchange to buy $55 million from Russian Polymetall Group also registered there, 100% shares of Kapan mining complex. Some Armenian banks closely cooperate with such national development institute as the Armenian agency for export insurance. The cooperation includes factoring when clients assign a claim to a bank for account receivable and in return they get factoring financing which allows for example the exporters to build more effective and reliable relations from financial point of view with theirs foreign partners. At the same time potential clients of supra-national interstate development banks are not interested in the investment financing in Dollars and Euro. They prefer national currency. But supra-national development banks in comparison to commercial ones have a very limited access to the instruments of getting and placing liquidity in national currencies. For example the Eurasian Development Bank with representative offices in six member-states has to conclude framework agreements with the central/national banks, to open in these banks correspondent accounts in national currencies in order to make transactions in the main currencies of the states. However as it has been already said the commercial banks in Armenia have high liquidity and do not need any additional debts to the development banks. That is why in the last years we evidenced several small similar projects when the EDB or the EBRD issue loans to micro business, small and medium business via commercial banks and finance through them trade transactions. And hardly ever development banks support commercial ones in the securitization of non-performing or low-liquidity loans and their refinancing on the market or just buy these assets and cope with them further themselves – which originally used to be their mission. Nevertheless there is another, more successful area of effective cooperation between supra-national development institutes and commercial banks, when EBRD buys a certain share fraction in Armenian commercial banks, buys into a capital and issues bonds thus supporting the development of Armenia’s capital market. As a rule those few banks which now have EBRD as their minority shareholders demonstrate more serious success and introduce more advanced bank technologies and products.

IMPROVED FINANCIAL LITERACY OF THE POPULATION IS THE PRIORITY OF THE ACTIVITY OF THE UNION OF BANKS OF ARMENIA

These days financial literacy of the population is considered a necessary requirement for the formation of a civilized society. Especially in circumstances when directions and formats of the provision of financial services undergo drastic changes. Numerous programs and initiative have been implemented in cooperation with commercial banks of the country, with a view to introducing and deepening of relevant knowledge among the public in the Republic of Armenia. For a more effective and full implementation of state policy in this area, a Committee was formed to develop and implement a national strategy for financial education and even earlier – in 2014 – the government of the country approved the National Strategy of Financial Education of the Republic of Armenia. The strategy aims at improving the level of financial literacy of the population of the republic that will contribute to the improvement of its well-being. The higher the awareness, the greater the likelihood that consumers will more effectively manage their budget, have more manageable debts, will be able to save and make competent investment decisions.

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The Union of Banks of Armenia based on the listed factors as well as being included in the Committee, attaches great importance to increase financial literacy of the population and carries out the necessary activities within the framework of its Charter authority. Thus, the Union of Banks of Armenia applies many initiatives in practice: organization events within the framework of World Saving Day, holding of seminars and trainings, issuing of teaching aids, etc. Also new and modern programs are being developed with the goal of creating a financially competent and more knowledge-based society. More recently on a joint initiative of the Union of Banks of Armenia and Club of Economic Journalists was organized a series of 11 seminars for journalists, specialized in covering financial and economic topics. Lectures were held by highest-level leaders of the banking system of Armenia, as well as the best experts and heads of various financial institutions. The journalists were presented various informational materials, analytical data on the banking system and the calculations on the legal regulation of banking in the Republic of Armenia. At the Closing Ceremony of this large-scale event, the Executive Director

of the Union of Banks of Armenia S. Sargsyan, in his speech, noted: “One of the tasks of the Union of Banks of Armenia is to make the banking system more accessible and understandable for our public and it could not be achieved without cooperation with the distinguished representative of our media”. Recently, the page of the Union of Banks of Armenia was officially opened on the social network Facebook, and now the Union can conduct even more active information activities to increase the level of financial literacy of the population. The official site of the Union of Banks of Armenia is also involved in this process. Obviously, the work to improve of financial literacy of the population should be lengthy. In addition, taking into account this fact, the Union of Banks of Armenia periodically organizes a series of public events called “Financial Literacy and Skills”. It seems that such a multifaceted approach in the near future will lead to achieve the goals that will contribute to the development of the economy of the Republic of Armenia. The Union of Banks of Armenia

Financial system of the countries of EurasIa

BELARUSIAN BANKS TRENDING DIGITAL

Alexander Kuchinsky, Chairman of the Association of Belarusian Banks

Banking system of the Republic of Belarus has been through a tough time in the digitalization process. It started in 2013 when the Plan of joint efforts of the authorities and financial market players was adopted to increase the share of non-cash payments for 2013–2015. Simultaneously another plan was introduced – a Plan of joint efforts to improve financial awareness of population for 2013–2018. Recently a new Plan for 2019–2024 has been signed. This work was done with active participation of international payment systems. And it all gave results: in 2013 the share of noncash payments was 16% while now it amounts to 45%. The National Bank of the Republic of Belarus is active about digitalization and in March, 2016 adopted a Strategy of digital banking development in the Republic of Belarus for 2016–2020. It is a basic document for the current work. For example the Strategy implies the creation and introduction of the Interbank system of identification which was formed according to President’s Decree #478 dd. December 1, 2015. It is based on the United Payment and Information Space. Moreover on April 18, 2019 the President of the Republic of Belarus signed a Decree #148 which provides for biometric identification including voice

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and video identification. Besides the data from the identification system can be used by the insurance and leasing companies, FOREX-companies and state bodies. Another aim of the Strategy is the development of settlement aggregators. Nowadays there is a draft Law “On payment systems and payment services in the Republic of Belarus” implying new market participants besides banks which will be able to make payments to third parties. One more target was to develop the remote banking, and it was reached. Everyone is already used to the internet and mobile banking but now there are different ways of remote interaction between banks and clients: chat bots, social networks. The spread of payments with banking cards in the Republic of Belarus today can be compared with the level of European developed countries. Pay pass is also popular, as well as the use of QR-code for payments. Cyber security is under close attention. In August, 2018 Belarus created FinCERT – center for financial cyber security. Besides, Belarus gradually introduces ISO 20022 for financial services. At the first stage in July, 2018 IBAN was introduced.

The Association of Belarusian Banks takes active part in all these processes. Since last September it became a member of Digital Business Confederation which comprises the Association ”Infopark” and the Association of mobile operators. We want to combine efforts and work out basic standards and requirements for all companies. There are several directions that we work on. The first one is API – Application Programming Interface. This technology allows an external application to access different program systems inside a bank. A lot of attention is paid to the blockchain technology of distributed ledger. Very promising is the Decree of the President of the Republic of Belarus #8 “On digital economy development”, and the banks are preparing a possible issue of tokens via ICO (Initial Coin Offering) under certain terms. In addition it is worth mentioning that during his visit to Minsk German Gref, the President and Chairman of the Board of Sberbank delivered a speech at our IT Park and highly appraised IT legislation in Belarus. In general one can conclude that the banks of Belarus are on digital trend and try to keep up with the world financial system.

EXPERT OPINION

MONGOLIA AND RUSSIA: FEATURES OF COOPERATION IN THE ENERGY SECTOR

Demchigjavyn Chimiddorj, Director of business strategy and planning, Erdenes Mongol LLC

“

IN RECENT YEARS, THE MONGOLIAN-RUSSIAN ECONOMIC COOPERATION HAS STEADILY GROWN AND BECOME AN IMPORTANT PART OF THE DEVELOPMENT OF MONGOLIA’S ECONOMY. AT THE CURRENT STAGE TRADE AND ECONOMIC COOPERATION BETWEEN OUR COUNTRIES IS BASED ON THE TREATY ON FRIENDLY RELATIONS AND COOPERATION OF JANUARY 14, 1993 AND ON THE ULAANBAATAR DECLARATION OF NOVEMBER 14, 2000. THESE DOCUMENTS REFLECT SUCH PRINCIPLES AS MUTUAL RESPECT FOR SOVEREIGNTY, TRADITIONAL NEIGHBORHOOD, EQUAL PARTNERSHIP AND MUTUALLY BENEFICIAL COOPERATION. INTERGOVERNMENTAL AND INTERDEPARTMENTAL TREATIES, AGREEMENTS AND CONDITIONS REGULATE BILATERAL COOPERATION AND INTERACTION OF SEPARATE MINISTRIES AND DEPARTMENTS. FOR THE LAST 20 YEARS, MORE THAN 100 AGREEMENTS WERE SIGNED. THESE DOCUMENTS ARE THE BASIS OF OUR RELATIONS.

”

Despite the diversification of foreign economic relations and a policy of openness, Russia remains one of the main trade and economic partner for us. According to Mongolian statistics in 2018 the total Mongolian-Russian trade turnover increased by 37.6% compared to 2017 and amounted to $ 1,796.2 million, of which export from Mongolia to Russia amounted to 85.9 million, and import from Russia to Mongolia – $ 1,710.3 million. These figures indicate that at current there is a trend towards an increase in trade. The main articles of Mongolian exports to Russia are ores, slag, ash, salt, sulfur, lime and cement, animal products and light industry. In the structure of Russian exports to Mongolia, the main place is occupied by oil products, machinery and equipment, automobiles, food products, chemical products, building materials, cigarettes and tobacco, household appliances and electricity. The energy area takes an important place in the development of MongolianRussian trade and economic relations and is one of the traditional directions of cooperation between our countries. This cooperation can be divided into two stages: the period of socialist development of the country and the transition to a market development path. Our energy cooperation began in the early 20s of the last century, and it was with the help of the USSR that the foundations of the modern fuel and energy industry of Mongolia were created. Today its fuel and energy complex is an essential part of the economy and functions in conjunction with other sectors of the national economy with a view to sustainable economic growth. The Soviet Union has been of great assistance to Mongolia in creation of the energy base. First of all, with its help, the production process at a coal mine near Ulaanbaatar in Nalaiha was mechanized – and thereby the foundations of

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the modern energy system of Mongolia were laid. As a result, coal production, as the main source of electricity production in Mongolia, increased. In the 1940s, the Soviet site participated in creating a central station in the capital and in the creation of small power stations in aimaks. All seven currently operating coal HES located in the zone of the Central Energy System (CES) of Mongolia were built during the years of the socialist period of the country's development with the help of the Soviet Union and upon projects of it. These are stations with combined production of electricity and heat (combined heat and power plants) operating to provide basic electric load, production of hot water for district heating and steam for technological needs of industry. As a result of economic support from the Soviet Union in Mongolia, in the 1980s a very high rate of growth in electricity production was achieved: in 1985, electricity production reached 3,568.3 million kWh. Thus, at the end of the 80s of the last century, a large fuel and energy base was created in Mongolia. The second stage in the development of cooperation between Mongolia and Russia in the energy sector begins in the early 90s. After the breakup of the USSR, economic cooperation between Mongolia and Russia, although it developed, remained low until the end of the 1990s, especially in the energy sector. Consequently, the deep systemic economic crisis in Mongolia connected with the transition to a market economy and curtailing economic support from the USSR, in 1996 there was a reduction in electricity production to 2614 million kWh. In subsequent years, a gradual restoration of the energy sector began, as a result of which the pre-crisis (1989) level of electricity production was exceeded only in 2007. Currently, seven coal power plants operate in the energy sector; more than

a dozen hydroelectric power stations of low power (from 0.5 to 2 MW), as well as solar and wind power plants. Dozens of diesel power plants with capacities from 10 kW to 3 MW provide electricity to the centers of aimaks; almost all local power plants are connected to the power systems of Mongolia.

REFERENCE Demchigjavyn Chimiddorj Graduated from Mongolian State Technical University (specialty - electrical engineer); took a master's degree in IT management from Strayer University in the USA. He has been working in the energy sector of Mongolia for more than 30 years: he was the head of the electrical service of the Central Energy System (CES) of Mongolia, the executive director of the National Dispatch Office of the Energy System of Mongolia, the general director of the Ulaanbaatar HES-3 and the director of the energy policy department of the Ministry of Energy of Mongolia. By decision of the Government of Mongolia, in 2018 he was appointed director of the department of business strategy and planning of the state mining corporation Erdenes Mongol LLC, which is an enterprise established for the purpose of planning, developing and operating strategically important mineral deposits.

Over the past almost 30 years, the energy sector of Mongolia has become one of the most important components of the country's economic development. In the late 90s, it basically completed the transition from a centralized administrative command system to a market one, and currently electricity is sold in the Central Energy System through the main market – the Single Purchaser Model (SPM) – and two other related markets: spot and competitive. Today, Mongolia is one of Russia's partners in export operations on electricity, and cooperation between our countries in the energy sector is based on the “route map” that has developed over the years of the socialist period in the development of Mongolia.

EXPERT OPINION

a number of small-capacity hydro-solar and wind power plants. The power shortage during the peak load in the Central Electric Power Plants and almost the entire volume of electricity needs in the WES are met through the electricity imported from Russia. Due to the growth of the economy of Mongolia (in 2018, GDP growth amounted to 6.9%), the demand for electricity, including its import from Russia, will increase. The latest forecast of demand until 2020, prepared by Economic Consulting Associates for the World Bank, assumes that the average annual growth in demand for electricity in the framework of the Central Electric Station will be 3.5%. In addition, resulting from the beginning of open mining at the Oyu Tolgoi copper-gold deposit, demand is expected to increase in the South Gobi region to 600 MW by 2020. According to the Ministry of Energy of Mongolia, electricity consumption is increasing by an average of 6% per year, and this growth will continue. It should be emphasized that Mongolia is a country with a huge territory, a small population and a relatively underdeveloped industry, as a result of which household consumption predominates in electricity consumption. The equipment of ex-

The geopolitical position of Mongolia – the lack of direct access to world oil and gas markets, as well as the presence of an extended border with Russia and China – determines the economic vector of its development in the energy sector. Meantime, work on the reconstruction of Ulan-Bator HES-4 is underway using credit from Vnesheconombank of Russia and the International Investment Bank, and the Ural Turbine Plant (Yekaterinburg) supplies turbines and other equipment. Because of the reconstruction, the capability of the HES will increase by 120MW. However, the shortage of electricity will continue. According to the Ministry of Energy of Mongolia, in 2018, our country received 20% of its electricity through imports from Russia and China. Today, Mongolia’s electricity system, created with the technical and economic assistance of the Soviet Union, consists of four independent electricity systems: the Central Energy System, the Western Energy System (WES), the Eastern Energy System (EES), and the Altai-Ulyasutai Energy System. The main share (79%) of electricity is produced at the HES with an installed capacity of 823 MW, 4% at diesel power plants with a capacity of 46 MW and at

isting power plants deteriorates physically and morally, which leads to a shortage of electric power, especially peak during winter highs. In addition, the energy system has a small load, the length of the lines is huge, and the number of generating sources is small and they are concentrated in a limited area; the process of summer-winter or morningevening regulation of the voltage and reactive power of the system is also very difficult. To this must be added that investments in the electricity infrastructure have not kept pace with demand, and this significantly reduces the reliability of power supply and increases overloads in a worn distribution network. Thus, low operational efficiency and poorly maintained and outdated equipment are a serious problem in the Mongolian energy system. Recall also that the power system of Mongolia is dependent on the power system of Russia and does not have a regulatory power source for various cases – for example, in emergency situations or when peak loads change to minimum night loads. In one word, the energy system of Mongolia is in deep trouble today, especially given the increasing domestic demand for electricity.

Ulaanbaatar

Sakhalin RUSSIA

MONGOLIA Gobi Desert

1130 km Shenyang

745 km

Vladivostok

215 km Dandong Dalian

Tianjin Beijing

CHINA

1500 km

Pyongyang

550 km

Seoul Jinan

JAPAN

Qingdao 610 km

1065 km

325 km KOREA

Оsaka Busan

215 km Коbе 880 km

Nanking Hangzhou

Fukuoka Shanghai

Tokyo

To solve the above problems, it is necessary, in the first place, to take measures to improve the structure of generating capacities in Mongolia. That would require to solve the issue of creating a hydroelectric power station that could work as a system regulator; to place in operation renewable and other sources of electricity; to put in service generators with a wide range of reactive power regulation. In this regard, Mongolian-Russian cooperation in the electric power industry can be developed, in our opinion, in the direction of joint construction of new generating capacities and electric grid facilities providing parallel work with border energy systems and the creation of an interstate electric power system. The problems of the energy sector of the economy of Mongolia can also be successfully solved through cooperation with other countries, in particular with China. It is energy cooperation in a trilateral format (Russia, China and Mongolia) has great potential, and it was discussed during a trilateral meeting on the SCO summit on June 14, 2019, where President of the Russian Federation Vladimir Putin, Chairman of the People’s Republic of China Xi Jinping and President of Mongolia Battulga Khaltmaa participated. During a meeting with the leaders of Mongolia and China, Vladimir Putin said that Russia was ready to ensure uninterrupted supply of electricity to energy-deficient regions of China and Mongolia, as well as ready for closer cooperation with China and Mongolia in the energy sector. “We are interested in receiving specific proposals on possible joint projects from Chinese and Mongolian partners,” – the Russian president said. The realization of concise energy projects in a trilateral format will be an important step in the implementation of the “One Belt – One Way” project. On June 24, 2016, in Tashkent at the SCO summit between the Russian Federation, the People’s Republic of China and Mongolia, an agreement was signed on the creation of an economic corridor “Mongolia – Russia – China”. Currently, experts from the three countries constantly consider the possible joint energy projects relevant to the creation of an economic corridor between the three states. In order to create a legal basis for the development of cooperation, a draft Agreement on cooperation in the field of electric power between the Government of the Russian Federation and

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the Government of Mongolia has been prepared. It is hoped that this document will be signed in the near future. Of course, the conclusion of such an agreement will contribute to the development of both bilateral and trilateral cooperation in the energy field. Moreover, resource and economic opportunities for its expansion, in our opinion, are available. One of the strategic directions of trilateral cooperation is the gasification of the Baikal region of Russia, the central region of Mongolia and the northern regions of the PRC in case of the construction of an export gas pipeline Russia – China through the territory of Mongolia. At the plenary session of the IV Eastern Economic Forum in September 2018, the President of Mongolia Battulga Khaltmaa said: “The main foreign policy directions of Mongolia are the stable development of friendly and goodneighborly relations of comprehensive cooperation with Russia and China, as well as participation in political and economic integration processes in the region. <...> We are ready to cooperate on the construction of a gas pipeline from Russia to China through the territory of Mongolia". It should also be noted that the laying of this gas pipeline will contribute to solving the issue of preserving the ecology of Lake Baikal, and may become one of the conditions for removing the threat of building a hydroelectric station on the main artery of Lake Baikal – the Selenga River and its tributaries. Russia strongly opposes the construction of a hydroelectric power station, and proposes to replace the energy shortage of Mongolia with an additional volume of electricity supplies at reduced prices. Nevertheless, the construction of a hydroelectric station on the Selenga remains an urgent issue for Mongolia. In analyzing the cooperation of Mongolia and Russia already in the oil sector, it is noteworthy that Russia is our main trade and economic partner. Since the volumes of oil produced in Mongolia are not enough to satisfy the ever-growing demand for hydrocarbons, the country's fuel market is almost completely dependent on imports of petroleum products from Russia. Important in the development of energy cooperation between the two countries is engagement in developing of the Tavantolgoi coal deposit in a part of the supply of mining equipment and the construction of the railway to ensure the export of coal to the market of Northeast Asia through the Far Eastern ports

of Russia. It is one of the largest reserves in the world: 6.5 billion tons of coal, about 40% of which is high-calorie coking coal. In summary, it should be noted that the aim of energy policy of the Government of Mongolia is the supporting energy independence and energy security of the country including by the formation an energy resource market and the creation a reliable energy base for sustainable economic growth. The resource potential of Mongolia in case used effectively should be one of the most important prerequisites for the steady growth of the country's economic development and its entry into the reserve of world mineral resources. Scientists predict that after 2020 a dry technology of oil and gas extraction will appear, as a result of which the fields of several countries, including Mongolia, will be involved in the operation. In the performance of a task of reliable energy supply and energy security of Mongolia, development of integration and close interaction of integration associations in the energy sector are necessary. Energy cooperation should also strengthen in the use of alternative energy sources and energy-saving technologies. At the same time, the main part of energy resources is non-renewable, and therefore resource flows must be rationally distributed. In conclusion, I would like to express an opinion on the implementation the “Asian Energy Super Ring” project, involving the consolidation of the energy systems of Russia, China, Mongolia, the Korean Peninsula and Japan, that is, those countries that are geographically part of the macro-region of Northeast Asia. It should be emphasized that the realization of this project is corresponds to the energy policy of Mongolia. The President of Mongolia, speaking on September 12, 2018 at the plenary session of the IV Eastern Economic Forum, laid emphasis that Mongolia was interested in the project and called for speeding up its implementation. Russia, China, South Korea and Japan also express interest. However we understand that there are still many unsolved problems, since this project is not only a matter of energy, but also to a large extent a question of geopolitics. Nevertheless, we are confident that in the new geopolitical conditions, mutually beneficial energy cooperation remains the mainstream for solving problems and ensuring energy security in the countries of Northeast Asia, as well as for the sustainable economic development of Mongolia.

BUSINESS IN THE COUNTRIES

THE ROMANIAN ECONOMY: STRATEGY, INVESTMENT POLICY AND COOPERATION WITH RUSSIA Tudor Afanasov, President of CECRR

Alexander Tyurin, Economic Advisor to the Russian Embassy in Romania

Andrey Naryshkin, Director for Development of the Foreign Network of JSC Russian Export Center

â&#x20AC;&#x153;

IN 2014, THE CHAMBER OF ECONOMIC AND CULTURAL COOPERATION BETWEEN ROMANIA AND RUSSIA WAS FOUNDED IN ROMANIA. HOWEVER DESPITE THE ACTIVE WORK OF INFORMING RUSSIAN REPRESENTATIVES, IN RUSSIA THERE IS STILL NOT ENOUGH INFORMATION ABOUT THE ROMANIAN ECONOMY AND, IN PARTICULAR, INVESTMENT SUPPORT PROGRAMS. IT IS THE ROMANIAN ECONOMY, THE INVESTMENT POLICY OF ROMANIA AND ITS INTERACTION IN THIS AREA WITH THE RUSSIAN FEDERATION THAT ARE THE SUBJECT OF THIS REVIEW.

In June 2014, the Ministry of Economy of Romania approved “National competitiveness strategy 2014-2020”. The strategical goals of this document are: 1. Creation of legal environment; 2. Deepening partnerships between the public sector and the business environment; 3. Competitive growth of manufacture goods and services in Romania; 4. Shift in emphasis in development to 10 sectors with the greatest export potential: tourism and eco-tourism; textile and leather articles; forest industry complex (including furniture industry); crafts; informative and communication technologies; food handling; pharmacy; energy production and environmental management; bioeconomy (agriculture, forestry, fishery and mariculture), biopharmaceutics and biotechnology. 5. Preparation of the program “Generation 2050” and solution of pressing social problems. In September 2018, the “Industrial policy of Romania” was adopted. This document is aimed to create conditions, conducive to improving the competitiveness of the Romanian industry. It will be implemented by accelerating the adaptation of industries to structural changes taking place on a global scale, creating favorable conditions for the development of entrepreneurship and business (in particular small and medium enterprises), organizing favorable conditions for business cooperation, as well as by increasing industrial potential and developing a single innovative scientific and technological development policies. The main goal of industrial policy must be higher value addition of Romanian goods, development of innovative clusters and fostering innovation as well as investment in high-tech sectors. The industrial policy includes the following financing programs: improving the energy efficiency of manufacturing processes (including the use of renewable energy sources); development of bioeconomics; implementation of innovative concepts and technologies (industry 4.0, 3D printing, open innovation, etc.); industry research (marketing innovation); increasing the competitiveness of industrial goods. According to the program of the Government of Romania for 2018-2020, the economic model for this period consists of measures that have already been implemented in such countries as Poland, Denmark, France, Germany, the United Kingdom and the United States. The program assumes that Romania will be distinguished by one of the most liberal fiscal regimes that exist in the European Union. Since January 1, 2019, the number of taxes, fees and commissions charged in Romania should be no more than fifty: for the population, the amount of total taxes will not exceed ten, and for enterprises should be about forty. Over the past few years, the government has generally adopted a growth strategy based on an increase in wages, which is designed to stimulate consumption at the household level and, accordingly, GDP growth. But at the same time, this model has already led to an increase in the budget deficit. As to investments, according to the latest published data of the National Bank of Romania, the amount of foreign direct investment in Romania for 2018 increased by 8.56% compared to the same period of the previous year and amounted to 5.342 billion euros, of which contributions to capital (including reinvested net profit) reached 3.771 billion euros, and value of pure credit money – 1.071 billion euros.

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BUSINESS IN THE COUNTRIES

As of November 30, 2018, Romania registered 220.8 thousand enterprises with foreign capital. The largest number of these enterprises are Italian owners. It should be noted that when implementing projects in Romania, a foreign investor receives the following benefits: exemption from income tax when investing in new technological equipment used for commercial purposes; income tax exemption for employees employed as software developers; exemption from income tax for employees employed in research and development companies; income tax exemption for research companies for the first 10 years; specific deduction of R&D expenses; accelerated depreciation of equipment for R&D. In addition, investors creating production facilities or offices in an industrial, scientific or technological park are exempt from paying land, construction and urban development taxes, taxes levied for changing the purpose of the land plot, and receive an additional deduction from taxable income of 50% of R&D expenses. There are programs of support of investment activity. One of them is the State Support Program for Investments that have strategic value for the economy of the country. The budget of the program is 4,07 billion ley which is equivalent to about 925 million euros. Whereby in the year the upper limit of funds allocated for these purposes is limited to the amount of 638 million lei (approximately 145 million euros). Private enterprises can rely on government assistance depending from the region of activity, as well as regional support, which depends on the costs of investment projects (tables 1 and 2). In addition, there is a National Rural Development Program 2014–2020. In accordance with this direction, the share of non-refundable state support can be up to 50% of the total investment, but will not exceed 1.0 million euros for the project – in the event that large-scale integrated production is not planned, and 2.5 million euros for project – in case of creation of large-scale integrated production (regardless of the type of applicant). Investment cooperation between Romania and Russia at this stage is small. According to the Central Bank of Russia, in the first half of 2018, direct investments for 261.8 thousand US dollars came from the Romania to the Russian economy and 188.2 thousand dollars from Russia to Romania for the same period.

Table 1 Maximum level of state aid depending on regions

Maximum level of state aid Region 2014–2017 Bucharest

2018–2020

11,25 million euros

7,5 million euros

West and Ilfov

26,25 million euros

Northwest, Center, Northeast, Southeast, South Muntenia, Southwest Oltenia

37,5 million euros

Table 2 Volume of regional state support as a percentage of the costs of an investment project

Maximum level of state aid Region 2014–2017 Bucharest

2018–2020

15%

10%

West and Ilfov

35%

Northwest, Center, Northeast, Southeast, South Muntenia, Southwest Oltenia

50%

Accumulated direct investments in the Russian Federation from Romania as of July 1, 2018 amounted to 14 million US dollars, to Romania from the Russian Federation as of the same date – 30 million. In the meantime, Russian companies continue to invest in the local economy through their European representative offices. Today in Romania, subsidiaries of Russian energy companies conduct business. Therefore, in the Romanian market, the Serbian subsidiary of Gazpromneft NIS Petrol is represented, which currently owns a network of 18 gas stations. Since 2005, Lukoil has been the owner of the third largest refinery in terms of output in the country. From the start of the Russian refinery, about 600 million US dollars have been invested, of which 120 million have been invested in environmental protection. Petroleum products are sold through the company's own refueling network; Lukoil owns 310 gas stations.

The plans of Petrotel-Lukoil include the modernization of the coke-chemical plant of the refinery. A project worth 71.8 million US dollars is planned to be completed in 2021. By the same time, a new sulfur recovery complex (29 million US dollars) should be built. One of the promising activities is the development of the subsidiary Lukoil-Overseas of the Trident offshore field. Thus, today there is a high-untapped potential for cooperation between the Russian and Romanian businesses. The chamber is ready to support Russian exporters, especially since on July 12, 2019, it became an export-trading adviser to the Russian Export Center. In conclusion, it should be noted that existing projects show the effectiveness of such interaction. Moreover, a growing number of Romanian businesspeople attend the Russian Federation, participate in Russian exhibitions, find partners. It was hope that our countries will continue to develop mutually beneficial bilateral relations.

Forum ROMANIA–RUSSIA “ROMANIA-RUSSIA: SEARCH FOR NEW FORMATS OF COOPERATION” October 22–25, 2019 Program includes: o

The second Romanian-Russian Forum “ROMANIA-RUSSIA: SEARCH FOR NEW FORMATS OF COOPERATION” o

Romanian-Russian cooperation in bank financing;

Business in crises times;

International economic activity in the modern trends;

FBA EAC as a flagman of Eurasian integration;

Russian Export Center. Suggestions and solutions.

Jubilee meeting “Gala CCECRR 5 years”

Program of “Gala CCECRR 5 years” includes: gala dinner, musical program, drawing, surprises, charity auction and quiz. The program of the Forum also includes a gala reception on behalf of the Ambassador of the Russian Federation in Romania, excursions. The event invites representatives of diplomatic, political, economic and cultural societies of Romania, Russia, Europe and CIS.

For details please contact us on e-mail: :

office@ccecrr.ro

TECHNOLOGY

“

THE CONSTRUCTION BUSINESS IS ONE OF THE MAIN DRIVING FORCES OF ANY COUNTRY’S ECONOMY. RELATED INDUSTRIES AND THE DEVELOPMENT OF SOCIETY AS A WHOLE LARGELY DEPEND ON THE CONDITION OF THIS INDUSTRY. AT THE SAME TIME, THE CONSTRUCTION BUSINESS IS ONE OF THE FIRST TO TAKE THE FALL OF ECONOMIC CRISES AND CLEARLY REFLECTS ITS ACTUAL STATE. THE LACK OF SIGNIFICANT FREE CAPITAL AMONG THE POPULATION AND ENTREPRENEURS AUTOMATICALLY LEADS TO A DROP IN DEMAND AND AS A RESULT TO A FALL IN CONSTRUCTION VOLUMES. CREDIT SYSTEMS AND MORTGAGE MITIGATE THE SLOWDOWN BUT THEY DO NOT FUNDAMENTALLY SOLVE PROBLEMS BECAUSE THE FINAL COST OF HOUSING FOR CUSTOMERS INCREASES AND LOSES IN PERSONNEL AND TECHNICAL EQUIPMENT ARE RESTORED OVER THE YEAR. THE ONLY SOLUTION IS TO REDUCE THE COST OF CONSTRUCTION WITHOUT LOSS OF QUALITY AND THE AVAILABILITY OF CONSTANT PRODUCTION VOLUMES.

”

«PIONEER»: BREAKTHROUGH TECHNOLOGY IN THE SERVICE OF CONSTRUCTION BUSINESS

In contrast to the banking and financial sector, where processes of digitalization and improving interaction between participants are very dynamic, in construction business the inertia force and a rather conservative approach to project implementation methods remain. This is due both to objective reasons - in particular, the need to conduct a lengthy procedure for testing new materials before their introduction, and to be subjective, including the disinterest of large players in investing in new production facilities. As a result, this system does not allow to quickly change the established patterns of work and interconnections, to respond flexibly to changes in market demands but it perfectly maintains the balance of interests of construction corporations and material manufactures. It is enough to analyze the list of Russian companies and developers, who presented new technologies in recent years and were awarded at international exhibitions to understand that there are not many domestic innovators, who have achieved this level. And the most interesting for builders and investors will be the technology “Pioneer” which can be safely attributed to breakthroughs. The technology already has a number of achievements, among them: first place at the world exhibition “THE BIG 5 GALA AWARDS” in Dubai; recognition at the prestigious construction exhibition MIPIM in Cannes;

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Award of the first international forum Rusnanotech’08; 6 enterprises built abroad; successful introduction of new construction technology and materials in more than 10 countries of the world. “Pioneer” is a fully domestic development including the production of building materials based on nanotechnologies, the design and construction of buildings. Currently this technology produces more than 40 types of products for construction industry. The concept, by which we stand, is very simple: one enterprise must fully meet the need for basic building materials of the developer and significant reduce the time and cost of construction and installation work. The technology was of special interest in the Gulf countries. Despite a saturated market of construction materials and constant rivalry with leaders of this industry, “Pioneer” literally over a year went from an unknown newcomer to the commissioning of the largest enterprise for the production of non-autoclaved aerated concrete mixtures and blocks “ECOCON Industries”. The sales geography of this enterprise constantly expanding and has long been beyond the region. One of the factors of such success is the low cost of the company itself that allows to return investments in 2–3 years as well as the profitability of the entire production cycle. How is this achieved?

Alexey Golik, General Director of “Center Restoration” LLC

Firstly, a wide range of inert materials could be used as feedstock including sands, stone crushing wastes, volcanic rocks, ashes, dolomites and concrete. Secondly, the enterprise does not need fuel and autoclaves. Thirdly is the simplicity of the equipment, it makes the cost of its operation lower than that of manufacturers of products made of gas silicate and reinforced concrete. Fourthly, the possibility of using process water for production without preliminary preparation, including seawater, which becomes a determining factor for many partners. Fifthly, thanks to the nanotechnologies underlying the development, the amount of cement, chemical additives and plasticizers is reduced by 15–20% without loss of the quality of the finished product. Finally, the most important thing: all materials manufactured using the Pioneer technology have unique quality characteristics. All this is due to the nano-modification of materials, as a result of which additional chemical bonds and carbon nanotubes (CNTs) arise. The main ware is dry pack for cast-inplace non-autoclaved aerated concrete. Its strength characteristics, heat insulating, sound-insulation value and waterpower, the absence of harmful components and casted manufacturing technology make it possible to build from its materials the loadbearing and filler structures, lift slabs, screeds, flat roofs, wall blocks, architectural details and forms.

TECHNOLOGY

The structure of the cement stone: base cement (A) and finish grindin, modified carbon nanotubes (B). Concentration of CNT – 0.005% Table 1. Comparative characteristics of building materials

Material short text

Density, kg/m3

Conductance, W/m

Cold resistance, cycling

Water absorption ability, % by mass

Compressive resistance, kp/cm2

Clay brick

1550–1700

0,6–0,95

25–50

25–250

Silicate brick

1700–1950

0,85–1,15

50–300

Expanded-clay concrete

900–1200

0,5–0,7

35–75

Foamed concrete

500–1200

0,15–0,35

10–20

Autoclave foamed concrete

500

0,15–0,16

more 25

Autoclave foamed concrete

600

0,18–0,19

more 25

Nanogas concrete «Pioneer»

500

0,11

min 100

Nanogas concrete «Pioneer»

600

0,15

min 100

In tandem with the well-known technology LGSF (light gauge steel framing), buildings and structures with unique characteristics are build frim this material, with minimal costs and the complete absence of heavy lifting equipment and concrete pumps. The high factory readiness of product and ease of installation work allow to save time and money. All materials of this line are not hygroscopic and have increased adhesion. It is not necessary to have primers, membranes, roll waterproofing. This is no “draft” stage of finishing process: premises are ready for finishing immediately after installation. A promising direction of the use of non-autoclaved aerated concrete soon will be the construction of roads and foundations. The inclusion of foamed concrete “Pioneer” in the road cover allows to create a temperature barrier between the roadway and heaving soils that don’t freeze through during the cold season and are always in the zone of positive temperatures. Under the conditions of permafrost “Pioneer”, on the contrary, will keep the temperature of the frozen soil negative and eliminate subsidence of the subgrade. It is not afraid of the effects of petroleum products and does not require thorough preparation of the foundation. On the contrary, the aerated concrete itself becomes a reliable and durable foundation of the road and compensates for part of the loads on the canvas. And the most important thing is the low cost of the material itself and the work on its installation. In the traditional cast-in-place concrete frame building, the “Pioneer” technology also has a wide use: enclosing structures that do not require additional insulation and special plaster coatings; interroom and interroom partitions; flight of stairs, screeds, flat roofs, where the material is both insulation, screed, and waterproofing; panels for thermal insulation of facades, foundations and pavilions, various adhesives, putties, floor leveling. As a result, construction costs are reduced by 15–20%. However, the potential function embodied in nano-modified materials has not yet fully discovered. Technologists of the company continue the scientific and practical search in cooperation with major Russian and foreign scientists. One of results of international scientific cooperation is insulting plaster with unique properties developed in 2018. Lightweight, non-flammable, perfectly white and durable material is applied as a regular plaster and has a heat transfer resistance equal to polystyrene foam. It is easily paint and can combine the func-

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Table 2. Comparative characteristics of adhesive mixtures Adhesive mechanoactivated and modified mixture carbon nanotubes mixture

Standart adhesive mixture

Adhesive mechanoactivated mixture

Resistance to shrinkage tears

Bending resistance, MPa

Compression strength, MPa

Measures

The structure of the adhesive material on the cement-sand basis: base (A) and finish grindin, modified carbon nanotubes (B). Concentration of CNT - 0.005% tion of protecting structures and decorating facades or interiors. Much attention is paid to the environmental performance of materials – in the production and in the operation. An ordinary straight cement is used as a binding substance and only minerals that are safe for human health are fillers. To return to the beginning, it should be noted that the development of mod-

ern technologies is impossible without the support of the banking sector: it is the main initiator of the development of industry. Therefore, the possibility of cooperation with FBA EAC is of particular importance for the company - joint activities open up broad prospects for the implementation of progressive ideas and developments throughout the Eurasian space.

TechnologY

SAVING RESOURCES REFRIGERATING APPLIANCES AND TECHNOLOGY BASED ON ELECTROPHYSICAL METHODS

“

AMONG THE MAIN TRENDS OF THE FURTHER PROGRESS IN MODERN REFRIGERATING APPLIANCES AND TECHNOLOGY AN IMPORTANT ROLE BELONGS TO THE REDUCTION OF ENERGY COST WHEN GETTING THE ARTIFICIAL COLD AND CONSUMING IT. AS FOR NOW WE CAN SAY THAT THE TRADITIONAL SOLUTIONS OF THIS PROBLEM ARE ALMOST OUTSPENT.

”

Boris Babakin, Member of IAR (International Academy of Refrigeration), member of RANS, Professor of Engineering of processes, machinery, refrigerating appliances and technology at Moscow State university of Food Production

According to the forecast of the International Institute of Refrigeration in the nearest future the refrigerating conservation of perishable food has no alternative. At the same time modern production of artificial cold is one of the main consumers of high energy. Refrigerating industry accounts for 18% of global energy consumption. International Institute of Refrigeration has set the goal up to 2020: to reduce the energy consumption by refrigerating systems by 30–50% (as compared to 2000). One of the most effective methods in the development of energy-efficient refrigerating appliances and technology in the use of electrophysical methods (EPM) in agro-industrial complex. They are basing on gas-discharge processes – electro convection, corona, barrier and capacitive discharges and low temperature unbalanced plasma. With EPM the energy consumption falls in the range of 0.01 W/sm3 to 0.1 W/sm3. The low temperature unbalanced plasma in the area of atmosphere pressures provides for a complex, synergetic effect on the sterilized object through different inhibiting factors with the possibility to regulate the intensity level of each of them. Plasma is an effective way to inactivate different microorganism (E. coli, Bacillur sub. etc.).

On picture 1 you can see the main areas of application of the EPM in refrigerating appliances and technology. For example the use of EPM in conditioning provides for an effective bacterial treatment of air. Thus electro filters are now being widely used allowing to clean the air from coarse dispersion and microorganisms. And the advantage of electro filters over the mechanical ones is that they catch not only fine particle but also effectively kill microorganisms. In refrigerated processing of food the EPM solves the problem of frost formation on the surface of heat exchange of the cooling elements. The frost formation considerably influences the work of refrigerating equipment: firstly, extra heat-transfer resistance reduces the intensity of heat exchange, and secondly, aeroperformance of the equipment worsens. However the application of electro convective cooling leads to filiform frost formations on the surface of cooling elements (pic. 2 and pic. 3) and raises the effectiveness of heat-and-mass transfer. As our research results show the use of electro convection for cooling of an air capacitor improves the heat exchange and reduces the condensation temperature by 3–7ºС.

Pic. 1. Application of EPM in refrigerating appliances and technology Refrigerating appliances

Refrigerating systems

Refrigerating technology

Capacitors Auxiliary elements

Technological processes

Processing of thermolabile products, materials and production environment with low temperature unbalanced plasma

Refrigerated biological processing (cooling, freezing, storage)

Drying

Aseptic refrigerators

Dispersion of liquid antiseptic environments

Pre-sale preparation of biological products

Electro cryoseparation

Defrosting of biological products

Coating of food products

Conditioning

Cooling elements Refrigerating transport Ice generators Chillers Desublimators Cold accumulators

E U R A S IA N FIN A N C IA L & E C ONOM IC H ER AL D | #3( 8) 2019

TechnologY

а)

Pic. 2. Filiform frost formations on the surface of cooling elements and generating electrode

Pic. 3. Frost formations on the surface of cooling elements: а) without electro convection; b) with electro convection

There are also prospects for EPM in auxiliary elements of cooling elements (oil separators, liquid separators etc.). The liquid drops separate from a cooling agent mush better providing for the driest motion of compressor and better heat exchange of the main elements. As for the refrigerating transport, the sanitary treatment here with the use of electro convection and ozone-hydrous solutions works more effectively than with the use of chlorine-containing hydrous solutions which besides threaten ecology and environment. Pre-sale preparation of biological products with the use of ozone-air and

Pic. 4. Pilot unit for pre-sale preparation of biological products using the ozone-hydrous solution of 500 kg/h capacity

ozone-hydrous solutions extends the period of products storage due to lower bacteria content (pic. 4). The treatment of air environment, equipment and containers of aseptic refrigerators with the use of electro convection, ozone-air environment and the low temperature unbalanced plasma provides for highly effective bactericidal treatment. The low temperature unbalanced plasma is also promising in treatment of thermolabile products and materials at the temperature not higher than 40–50 ºС. Electro convection for meat cooling

and freezing improves the heat exchange, reduces shrinkage of goods and speeds up the process. When a frozen product is stored unpacked its shrinkage also reduces and electro antisepsis works. The electro cryoseparation of biological stuff allows to reduce the material loses and keep the quality. Moreover the process is dry (without water waste), doesn’t need expensive wastewater cleqning and is ecologically clean. In conclusion it is worth mentioning that these advantages are only part of current trends of usage of EPM in refrigerating appliances and technology.

Sewing” is the heir to the craft and continues its tradition. At the exhibition stand of “Torzhok Gold Sewing”, participants and guests of the forum were able to get acquainted with unique products of Novotorzh gold embroidery. Among honorary guests were Olga Golodech, Deputy Prime Minister of the Russian Federation, Igor Shchegolev, Plenipotentiary of the President of the Russian Federation in the Central Federal District and Igor Rudenya, Governor of the Tver region. A significant event of the forum was the ceremony of summing up the results of the regional stage of the AllRussian competition “Tourism Souvenir”, where in the nominations “Region Souvenir” of the VIP category and “City Souvenir” the prize places were won by products of the “Torzhok Gold Sewing”.

FORUM «RIVERS OF RUSSIA»: PRESERVATION AND DEVELOPMENT OF LEGACY OF THE PAST – A STEP INTO THE FUTURE On July 2, 2019 the regular annual National Tourism Forum “Rivers of Russia” was held in the Tver region on the base of the Zavidovo resort. The forum was attended by the company “Torzhok Gold Sewing” led by Chairman of the Board of Directors Oleg Ivanov.

Gold embroidery has been preserved in Torzhok since the 12th century and now Torzhok is the only place where traditions of this “precious” craft are remained. Gold embroidery has been threatened with annihilation more than once, now the company “Torzhok Gold

Also within the framework of the forum “Rivers of Russia”, O.Ivanov presented the interregional project “Sovereign Road” which was previously submitted by O.Golodets, Governor of the Tver region I.M.Rudeney. The name of the project is associated with the highroad, built at the order of Peter I and connecting Saint-Petersburg and Moscow. On the highroad was followed motorcade of the imperial dynasty Romanov – hence the name "Sovereign Road". The essence of the interregional project is to combine the efforts of researchers, tour operators, the hotel and restaurant business, as well as museum complexes to create a single cultural and tourist space in the Moscow, Tver, Novgorod and Leningrad regions.

Diplomas of the District Stage of the All-Russian Competition «Tourism Souvenir» – 2019 for 2nd place in the nomination «Souvenir of the year» in the category of «VIP» and «Economy Class» issued by OJSC «Torzhok Gold Sewing»

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DID YOU KNOW

ON THE WAY OF DEVELOPMENT OF CIVILIZATION: THE EYES OF GEOLOGIST

“

WE ALL KNOW ABOUT A PRIMITIVE MAN, MEANING, AS A RULE, THE EXISTENCE OF NEANDERTHALS AND CRO-MAGNONS. ALSO WE KNOW, FINALLY THE SAME, ABOUT THEIR HEAVY DESTINY, COMPLETE DRAMATISM AND GREAT HARDSHIPS. HOWEVER, OUR REPRESENTATIONS ABOUT WHAT THESE CONDITIONS WERE IN REALITY ARE FREQUENTLY CLOUDY. LET’S TRY TO GET OUTSIDE OF THE DISTANT AGES AND ATTEMPT TO ANSWER THE QUESTION: WHO ARE WE?”

”

Based on existing archeological notions, Neanderthals lived on the Eurasian continent, appeared there at least a million years ago. Cro-Magnons were on African continent and it is believed that they appeared in Africa 300 thousand years ago. It is thought that their stay there was relatively comfortable at that time. However, the main “showplace” of Africa – the Sahara desert – had the feature to become at times practicable for African population: as a result of climate change, becoming more humid, numerous oases in the Sahara were formed. It allows individual tribes of Cro-Magnons to cross the sands of the Sahara and make a settlement the northern part of Africa. But these blessed circumstances eventually changed: 85 thousand years ago the climate became rainless, Sahara was impassible again and continued its advance to the north. It can be assumed that resources on the territory cut off from the rest of the

continent, have drastically fallen off and the tribe living there was in a precarious situation. He had no choice how to find a way to move to the Arabian Peninsula. The number of the tribe, who left Africa, was about 400 people. And so, 85 thousand years ago CroMagnons began to make a settlement Europe and then Asia, Indochina and Australia. This process continued for about 11 thousand years. During this time Cro-Magnons interested with the indigenous Neanderthals but how they communicated– is the subject of archeologists’ research. We will be fasted “a little” forward, passed these 11 thousand years. Seventy-four thousand years ago the more or less peaceful existence of the Earth’s population and the entire animal world ended. Something happened that radically changed the climate of the Earth – the eruption of the super-volcano Tobo in Indonesia, on the island of Sumatra. The consequences were colos-

sal. The amount of pyroclastic material was huge – 800 thousand cubic kilometers, which is many times more than the largest modern volcanoes emit. An incredible amount of ash in the atmosphere was the reason that it fell to the ground together with ice – at the ratio of about 25% ash and 75% ice, formed icy sequences. They have been preserved in the north to the present time in the form of a thick layer of sediments that we now call permafrost and have played a colossal role in the Earth’s history. Why? Let’s discuss. To begin with, these sediments in the north have long attracted the attention of scientists. Even the earliest-explorer of Kazaks Semyon Dezhnev, moving to the East, were found at stops and later during the housing and small fortresses that the ground under soil layer begins to subside and melt. This land they called “yedoma”. Divergent angles alternated: they were considered estuaries of large

Valery Kryachko, Geological and Mineralogical Sciences Doctor, Corresponding Member of Russian Academy of Geopolitical Problems

E U R A S IA N FIN A N C IA L & E C ONOM IC H ER AL D | #3( 8) 2019

DID YOU KNOW

Permafrost boundary in Russia

rivers, discharging into the Arctic Ocean then as wind deposits because of high settlements. By the way, this point of view prevails now. But then it was time to reconsider these views in connection with the appearance of a large number of facts showed a different genesis of these sediments. At first, I say that I happened to spend two expeditionary seasons in 1989 and 1990 on the coast of the Arctic Ocean on the territory of Yakutia – in a group with permafrost scientists from the Institute of the SVKNII Magadan Academy of Sciences. There I can for the first time to personally familiarize myself with these sediments and to get information of these from the qualified scientists. And

although I am a specialist in the study of platinum fileds, this topic has captured me and still does not let go of years. And all because it has not yet largely studied, in my opinion, is of great interest for all of humanity. Turn our mind to Yakutia. There, near the village of Kazachye, on the Yana river and on the Arctic Sea coast, were found about six clusters of mammoth bones and all these clusters are quite big, 15–20 meters high, precipitates with already noticeable sloughing (destruction). Based on my observations, it was a result of melting “yedoma” and its slipping to lower levels. Locals, participated in the extraction of tusks, note that the productive stratum of the remains of mammoths in different places is located at a depth of sev-

Permafrost in Alaska near one of the tributaries of the Yukon. 1 – bottom layer of icy ash 2 – top layer of icy ash

en to eight meters from the surface. Finding this stratum in the cliffs, the inhabitants, with the help of pumps, begin to erode this icy mass and thus form branching galleries extending a hundred meters into the coast. They have to be made quite narrow for security reasons. But the question is: how did mammoths appear there? I think it could be only one mechanism. I had photographs of such cliffs on the one of the rivers in Alaska. Their depth is impressive – at least 50 meters. But the mostly is drawn to the fact that at a depth of about 15–20 meters you can see clearly the border in sedimentation and in this case, of icy ash fall. This mean that there were two periods of ash falls. The lower level about 30 meters thick formed 75 thousand years ago. When the ash fall ended, over time, the topsoil appeared and savannas with a grate feeding for the mammoth fauna were formed. Animals browsed, lived and then died, making natural cemeteries. It is difficult now to guess how long this period lasted. But it is absolutely clear that the time has come for the refall. Thus mammoths died earlier were buried under a new layer of icy ash. And it is this, form the point of view of locals of Yakutia, “productive” level is being excavated. But there is one more interesting fact. Romanian cavers in one of dene-holes found a skull simultaneously with the features of Neanderthal and Homo sapiens. This led them to look for the cause

of the death of this hybrid. In one of the lakes, a well was drilled with good core recovery. And the layered core showed a very sharp climate change, with a rough cooling. Moreover, this period was represented by ashes. The question arose: where did the ashes come from 30 thousand years ago? And an analysis of the territory of Europe showed that in the area of the Etna volcano in Italy, in one of the bays, the super volcano Campi Flegrei was located, which erupted 39 thousand years ago. And the ashes from the well were to be completely identical to the ashes of Campi Flegrei. But what does Yakutia? – you ask. And this when the second ash fall, described earlier by me, on the Yakutia coast, can be the ash fall from the volcano Campi Flegrei. In the images you can see clear that the upper part of the ash section is different in composition from the lower part formed by the ashes of the volcano Tobo that erupted 74 thousand years ago. Let’s return to Yakutia. There the staff of the St. Petersburg Institute of the History of Material Culture of the Academy of Sciences of Russia study one of the sites of the ancient man. The age of this site is 28 thousand years. This number can be a control for the time of the second stage of activation of the volcano Tobo. Probably this site is the last stage of stay of Neanderthals on this territory because on modern submissions they ceased their existence about 30 thousand years ago. And perhaps it was precisely that catastrophe that finally destroyed them. As you can see, there are many facts that make it necessary to evaluate “yedoma” deposits as a result of a big catastrophe and at the same time as an “instrument” made a turn in the development civilization. As for a mechanism of soil formation then it looks as follow. After the erup-

tion and ashfall with ice according to American scientists for about seven years until the ashes settle and the sun heating the surface of the earth, will give the opportunity “yedoma” to partially melt and free from ice, that is to become sediment. Well, the sediment is the ash with enormous amount of metal-organic compounds, which are great food for bacterial complexes, as a result of which fertile soils arise, allowing the development of grass stands. And only thank to these grass stands mammoth fauna appeared. And this is about 80 species of animals! Not only mammoths, but also woolen rhinos and bison, deer, sabertoothed tigers and cave lions and saigas. All this animal diversity lasted 40 thousand years. It is known that the first finds of mammoths dated from 50 thousand years and the last – 10 thousand years. Therefore, it can be assumed that animal world suffered during the send ash fall but still survived. Apparently, CroMagnons survived. But Neanderthals, perhaps, were not able to outlast this catastrophe. Although, we do not have enough observations that to move from guesswork to confidence. It can also be involved that the ash was unevenly deposited on the earth’s surface, and its composition on such vast areas changed. In any case, according to preliminary data, the first ashfall in composition was different from the second. We have already said - this is clearly seen in photos from Alaska. It can also be assumed that bacterial complexes in different climatic zones of the Earth differed from each other and as a result of this, soils of different color and composition from chernozems to red soils were formed. But is it? Only one thing is obvious: the process of the formation of vast fertile territories on Earth is associated with the processing of organic-rich ashes by bacteria.

Mammoth tusk on the border between two ashy depths

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Preparation for the expedition: researchers Sergey Poroshin (left) and Valery Kryachko. Northeast Integrated Research Institute, Magadan. 1989

It can be observed: the catastrophe that occurred on Earth almost destroyed us but gave us the fertility of the soil, which we use skillfully. For what, however, it needed more than one millennium. However a fair question appears: can a catastrophe be repeated and what will do with us then? Moreover, taking into account, there is a super volcano Yellowstone on Earth. I recall, that the Tobo was a super volcano too! Can we compare their in size and impact on the planet? According to some data, the expected Yellowstone explosion is comparable to the Tobo explosion that has already taken place. This is to some extent encouraging, because in this case, as can be expected, there will not be all that is usually shown in disaster films – monstrous tectonic shifts and giant tsunami. What are these assumptions based on? And on the fact that the explosion of super volcano occurs with the emission of ash upwards. The main forces acting on the Earth are directed from the top down. And there is no shear tectonics, and hence there will be no huge dips in the crust, no horizontal displacements, therefore, there will be no mechanisms for the formation of a tsunami. At least in scale shown by directors and screenwriters. But, of course, these models need to be worked out. And the main question: what role did Neanderthals and Cro-Magnons play in the formation of modern man? Do we have their genes? There are numerous hypotheses on this account. And it could be that we live not only thanks to ashes of volcanoes but also to CroMagnon survivors of the catastrophe.

PARTNER NEWS

2019

DIGITALIZATION â&#x20AC;&#x201C; NEW RULES FOR A NEW GAME

ON MAY 30-31, BISHKEK INTERNATIONAL FINANCIAL FORUM 2019 WAS HELD FOR THE SEVENTH TIME. BIFF IS AN EFFECTIVE PLATFORM FOR EXCHANGE OF INTERNATIONAL EXPERIENCE, CREATION OF PARTNERSHIPS, DEFINITION OF THE ROLE AND POSITION OF THE FINANCIAL SECTOR IN SUSTAINABLE FINANCING MECHANISMS, INTRODUCING NEW TECHNOLOGIES AND DEVELOPMENT OF RELEVANT ECOSYSTEMS.

THIS YEAR THE FORUM BROUGHT TOGETHER 262 REPRESENTATIVES OF BANKING AND MICRO-FINANCIAL INSTITUTIONS, LOCAL AND FOREIGN FINANCIAL AND CREDIT OFFICES, INTERNATIONAL AND NON-GOVERNMENTAL ORGANIZATIONS, SUPPLIERS OF VARIOUS SOLUTIONS, PAYMENT ORGANIZATIONS, INDEPENDENT EXPERTS AND ANALYSTS, REPRESENTATIVES OF REGULATING AUTHORITIES, BUSINESS OWNERS AND OTHER COMPANIES FROM MORE THAN TEN COUNTRIES. ACCORDING TO THE ESTABLISHED TRADITION, THE PARTICIPANTS PAID TIME AND ATTENTION TO CURRENT TRENDS IN FINANCIAL MARKET, NEAR CHALLENGES AND PROSPECTS AND OF COURSE NETWORKING. ONE OF THE MAIN TOPICS WAS “DIGITALIZATION OF FINANCIAL SECTORS IN REGIONS”. TAKING INTO ACCOUNT THAT 2019, THE PRESIDENT OF THE KYRGYZ REPUBLIC SOORONBAY JEENBEKOV ANNOUNCED THE YEAR OF REGIONAL DEVELOPMENT AND DIGITALIZATION, THIS ISSUE IS ESPECIALLY URGENT FOR KYRGYZSTAN. A NUMBER OF FRAGMENTS OF SPEECHES OF THE EVENT’S PARTICIPANTS ARE PRESENTED TO ATTENTION OF READERS.

Dastan Dogoev, Advisor to the President of the Kyrgyz Republic, Director of the PIU Digital CASA:

Today the Kyrgyz Republic is not in words but in fact actively involved in world trends and passes to digitalization. At the state level, the project “Digital CASA-KP” manages this project and financial sector is one of our key partners. Presently we clearly understand that it is in cooperation with this sector that it is possible to actively promote the establishment of the digital economy through the development of internet-trading, updating and updating and laying the foundations of the legal framework taking into account digital trends, as well as joining efforts to launch digital solutions, improve digital financial skills and conduct an education campaign in support of change management.

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in of the digital age. The move away to digital payments is the largest change in the payment system after the appearance of bankcards. Digital commerce grows in double-quick time fast than traditional, which contributes to increase the market “internet thing”. Today the consumers often have several devices to acsess the Internet and shop there. It allows to change the payments’ structure which results in modernization of infrastructure, in the active transition from products to the provision of services, in the emergence of alternative types of payments and the appearance of new networks. However, such active expansion also contributes to an enlargement in cyber security risks, which requires increased attention to issues of identification and authentication. The technology AR/VR is becoming more and more popular, voice assistants are an integral part of our lives, increasing the value of voice commerce; personalizes slant is becoming the most essential for the modern consumer. The use of bots for online commerce is already considered mandatory, and subscriptions and subscription campaigns reach a new level and become an integral part of commerce on the Internet. Thus, flexible adaptation to the speed of change, security and convenience of payments become the key to successful transactions in the future.

purchase of goods, and ways of payment. The model of interaction between companies and clients is changing along with behavior of a consumer: the task of finding and retaining a loyal buyer is becoming increasingly difficult. In the age of digitalization, banks must accept new rules of the game just like other areas. Moreover the competitors from non-financial sector appear: today not only banks can create a mobile application and a payment service. Online retailers and even social networks have such successful examples. Specialists and experts of SAP already know how with the help of machine learning technologies, blockchain, robotics and artificial intellect, banks can transform their business and win in the competitive fighting. We are also certain that in the era of experience economy it is competent data management, compliance with ethical standards and transparency in communication that will increase confidence and build a positive brand reputation.

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Talant Omuraliev, Deputy Chairman of CJSC Interbank Processing Center - operator of the National Payment System “Elcard”

Anton Borozdin, Director for Business Development Mastercard in Central Asia:

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The payment world is changing and now we are in a new world where old rules are no longer in force. New technologies are developing exponentially, accelerating the coming-

E U R A S IA N FIN A N C IA L & E C ONOM IC H ER AL D | #3( 8) 2019

Semyon Popov, Director of SAP, Central Asia:

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Technologies changed the principles of information retrieval and taking a decision on the

The success of digitalization consists of three components: the existence of technology, proper regulation and merchandising by the financial sector in the regions. Taking into account that “Elcard” has a status of a national payment system, and we have all technical and technological opportuni-

PARTNER NEWS

ties and developments. And we are ready to give them to the market if problems of regulatory character will be resolved. Now, unfortunately, there is no this component therefore, we can see a serious imbalance: digital technologies develop well in the capital but in regions there is a great hysteresis. The solution to a question of remote identification and introducing the concept of a digital contract - these components could greatly advance digital technologies in the regions. However, it should be noted that many people here confuse the biometric database with the banking one. It needs to be clear about state identification and identification that required in the financial sector are governed by various laws. The second is based on the Law of the Kyrgyz Republic “On countering the financing of terrorism and the legalization (laundering) of criminal proceeds”. This law requires the physical presence of the client for each of his appeals and, accordingly, limits the possibilities for the financial system to go online. Until the analogs of the required documents appear in digital form, which will be recognized by law, banks will not be able to move towards digitalization of the regions. We are all talking about digitalization - but it is only possible with a change in the regulatory framework.

Denis Judin, Sales Director Colvir in Russia and the CIS

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Over recent years digitalization is a key topic in all forums. However this word means a wide range of intentions from the creation of qualitative internet – and mobile banking to adjustment of digital channels and processes, adjusting the legislation including to make clients truly feel part of the digital banking community. Indeed, it is one thing when a client has a mobile application in which he did something, but then he still needs to come to the bank - sign the necessary document. And another cup of tea when the client, being at home in front of the TV, can get absolutely all banking services and forget about the existence of bank branches. Moreover, in our opinion, this applies to both individuals and legal entities. Our company has already automated banks across the CIS for 19 years. Now we specialize in the creation of a digital bank that is such not outside but also inside. Today a digital bank cannot be limited to creating, for example, a beautiful application with the opportunity of ordering a card issue, which will be followed by a three-day process directly at the bank, when staff will have to carry paper documents between different departments. Today, a digital bank must have digital processes and communication methods - simple and fast - both outside and inside. Certainly, in the success of digitalization, work is also important to improve the technological literacy of the population. For example, today smartphones are everywhere but at the same time, we see that the mentality of people has remained the same: received a salary on the card and on the same day removed it in cash, put it under the pillow - and live. No digital bank can be built in such an ecosystem. Therefore, it is important to increase the financial

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Following the results, the resolution of BIFF-2019 in digitalization sector included items related to the development of legal framework aimed at the creation of conditions ans incentives that contribute to: development and implementation of digital financial services in the Kyrgyz Republic; opening banking/payment API; recognition of 3DS identification as an analogue of a qualified electronic signature;

literacy of the population, the growth of trust in banks - so that money is in the accounts. And this is one of the key tasks not only of banks, but also of the state. Only then will it be possible to say that the bank is truly digital and the economy is digital.

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Anvar Abdraev, President of the ALE "Union of Banks of the Kyrgyz Republic"

The banking system within the framework of the initiative of the president of the country plays an important role as a basis of the financial system. In presidential initiatives, some of the proposals of our sector in support of sustainable development have already been reflected. But we understand that areas and the breadth of our cooperation and engagement in transformational processes have not yet been fully determined. Therefore, thanks to various events and, in particular, this forum, we are actively consolidating the position of the financial sector for effective partnerships and embedding our innovative proposals in the development processes of the sector and the country as a whole.

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introducing in Laws and Statutory Instruments the definitions and meanings of a digital contract as a substitute for paper versions of relevant documents; development of QR payments; preparing a decree of the Government of the Kyrgyz Republic on the implementation of non-cash payment of public services through online services; creating conditions for the development of electronic commerce; strengthening work on public awareness.

19 October 22–24, 2019

XVI

INTERNATIONAL FORUM ON BANK INFORMATION TECHNOLOGIES

“BANKIT’ 2019”

For 15 years “BANKIT” is relevant and high-demand. Because each participant is guaranteed: three productive, inspiring and interesting days; rich balanced program; lighting the position of the regulator; new products from developers and advanced solutions from practitioners; professional atmosphere with discussions; discussions on the hottest topics; exhibition; master classes; business contacts. Address of the event: President Hotel, Minsk, st. Kirova, 18 Working language: Russian Organizers: National Bank of the Republic of Belarus, Scientific and Technological Association "Infopark", Association of Belarusian Banks. Program and conditions of participation on the website: http://bankit.by/index.php On October 22, 2019, within the framework of the forum, a meeting of the International Banking Council will be held on the topic: "Priority areas of digital transformation of the banking sector".

History of money

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THE RAND REMAINS ONE OF THE MOST STABLE CURRENCY UNITS NOT ONLY IN THE SOUTH AFRICAN REGION BUT ALSO ON THE WHOLE AFRICAN CONTINENT FOR A LONG TIME. ITS HISTORY BEGAN IN 1961, AFTER INDEPENDENCE OF THE REPUBLIC OF SOUTH AFRICA.

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THE RAND

BORN IN SOUTH AFRICA The rand takes its name from the Witwatersrand mountain range, which from Afrikaans is translated as “white waters’ ridge”. In this place, in the late nineteenth century one of the largest gold deposits in the world was found which for a long time used among other things to the manufacture of coins. Such mechanism of origin of the name is very similar to the classical theory of origin of the word “thaler” – from the town of Joachimsthal; in its vicinity silver was mined, from which coins, popular in Europe, were minted. The first rands were introduced in 1961 and in their appearance in many ways resembled the withdrawn from circulation of South African pounds. This made it easier for people to switch to a new currency. On the first notes had a picture of Jan van Riebeeck, the founder and first administrator of Cape Town in what then became the Dutch Cape Colony of the Dutch East India Company. Interestingly, the first rands adopted a bilingual system from the South African pound: in one variant banknotes were issued with inscriptions presented first in English and then in Afrikaans, in the second variant – vice versa. In future, linguistic characteristics in different versions were taken into account in the issuance of South African banknotes. Coins also duplicated British issues but were denominated in cents and in the decimal system. In doing so, the size and material of coins at the first stage remained almost identical to the British samples. Later banknotes and coins repeatedly changed. A series of bills with the name “Big Five”, released in the 1990s, received wide popularity. On the bills were depicted the heads of animals - rhino, elephant, lion, buffalo, leopard. But the most radical change in circulation of money was the issue of a new set of banknotes bearing Nelson

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Mandela's image in 2012. Moreover, in 2018 a special commemorative series of banknotes was released in commemoration of the 100th anniversary of his birth. In general, a particular relevance to Nelson Mandela was repeatedly expressed in the imprinted of his portrait on various commemorative coins of South Africa. It should be noted the profound respect on the part of the Republic of South Africa for the languages of large peoples inhabiting the country. The coins in circulation today are issued in each of the 11 official languages of the Republic, that is, you can actually meet the rands in Zulu, Xhosa, Afrikaans, Northern Sotho, Tswana, Southern Sotho, Tsonga, Swazi, Venda, Southern Ndebele and, of course, English. Modern banknotes also take into account this linguistic diversity of the country. Today the South African rand, despite various economic changes, can be found not only in the Republic of South Africa itself but also in Swaziland, Lesotho, Namibia and even Zambia, Zimbabwe and Botswana. In fact, the South African rand is a kind of guarantor of the financial security of the region.

Vitaly Krasnikov, analyst