Glaziev believes that Orthodox banking is a way out of the abyss

Experts talked about the development of Russian banking system, engines of domestic production growth, and discussed project of equity financing of business in Russian Public Chamber on February 14, 2017. The discussion was held in the framework of “Financing the real economy – international practice of implementation of new tools which improve the efficiency of national financial systems” hearing.

Among the participants of the Public hearings – professionals and well known experts in financial and economic areas: Sergey Y. Glaziev, Presidential Advisor, professor of Public Administration faculty of Moscow State University; D. V. Lyubomudrov, a member of Investment Policy Committee of Trading-Industrial Chamber of Russia and a member of Orthodox entrepreneurs Club; O. M. Ivanov Vice-President of Regional Bank Association; Archpriest Vsevolod Chaplin a member of Harmonization of interethnic and interreligious relations Commission of Public Chamber and others. The event was led by V. P. Ermakov, a member of SMB development Commission of Public Chamber.

The participants reviewed problems of financing the real economy, and discussed possible solutions.

The main report was made by Sergey Y. Glaziev, on barriers preventing the domestic economy to develop advanced rates. He stressed that is “the problem of the whole country, the problem of its future.” Glaziev is one of the most active proponents of alternative system of business financing and of Ethical Financial System (EFS) along with Sergey N. Katyrin, the head of Trading-Industrial Chamber of Russia. The key elements of that system are – national solidarity of the business community, establishing a low-risk banks and the refusal of loan interest (Orthodox banking like Islamic or Swiss).

His report described the ways of overcoming the crisis. Due to “the meaning of monetary policy is to maximize investments, it is necessary that banking and industrial segments co-worked and establish a positive cycle of growing economy.” It is not enough to know clients for banks; they should work together for the result.

Glaziev drew attention to a strange situation – “we have built state-owned banks holding 70% of money, but they behave like private banks”. Therefore, “when a Central Bank increases the interest rate above the rate of return in manufacturing sector, it isolates the financial sector from the production segment”. In practice, it means that “companies who took the money at 12% rate five years ago, faced with the fact that state-owned banks force them to “return money” or credit at new rate. »So, even healthy, normal company goes bankrupt. Then there are some people saying – give us your business for free, and we negotiate with the bank”. Such situations are usual. Therefore, when the Central Bank raised the rate, it made a negative moral environment. Operating with normal interest rates became impossible.”

According to Glaziev, “this is a hidden raiding. Today it is a common practice due to the transformation of our banking system into usurious mode. If the interest rate is higher than the average rate of return in the manufacturing sector – it is usurious economy”.

The President’s advisor noted that today “the banking system is sucking money out of the economy”: ” We see a huge windfall on interest rates in our banking segment, falling volumes of investments and shrinking production today. What does this mean? The fact that the banking system has become a parasitic element of the economic system. Instead of providing the economy with money, it sucks the money through the financial sector and spits out the money on the market, and then – abroad. This is the answer to the question of where the money goes! Foreign exchange transactions are rising like yeast on the Moscow exchange. The Central Bank created an immoral mechanism of enrichment on speculation, on the manipulation of ruble exchange rate”.

Glaziev said with bitter irony: ““normality” of standards where trade decays, and the banks are getting richer, it is the main cause of our crisis.”

But Sergey is convinced that “the way out of the abyss, which is formed between the real sector and the financial sector of the economy, exists.” And the recipe, he says, is obvious: “a loan should help a company to expand constantly, to modernize production, to develop. Money is always a tool for economic growth!”.

Participants of Public hearing agreed on the need to use national traditions, the culture, and the benefits inherent in the Orthodox culture to enhance the functioning of the national financial system. Resolution Proceedings recorded the need to “make an appeal to entrepreneurs to explore and support the initiative of the Club of Orthodox Entrepreneurs and of the Club of Ethical Financial System.”

Sources: Russian Public Chamber, Club of Project process

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