Russian Financial Sector Update

Bank of Russia BANK OF RUSSIA: OVERVIEW The Central Bank of the Russian Federation REFORMS Promoting price and financial stability, fair competition, newest technologies and best practices Monetary policy inflation targeting regime adopted with a 4% medium-term target rate pursued using conventional monetary policy instruments Banking regulation and supervision banking sector rehabilitation in progress, bank resolution mechanism new introduced; proportional regulation introduced and an advanced IRB approach for the largest banks gradually phased in; banking regulation compliant with the Basel II, Basel 2.5 and Basel III standards, maintaining AML/CFT supervision of credit and non-credit financial institutions (according to the Regulatory Consistency Assessment Program (RCAP) 2016); deposit insurance with RUB 1.4 mln as a limit (in some cases - up to RUB 10 mln); setting up a national rating industry. Only credit ratings of Russian national agencies may be used for regulatory purposes 0 Market infrastructure benefits from infrastructure put in place, tax and regulatory reforms (T+2, CSD and access of ICSDS, up-to-date CCP, Individual Investment Accounts, IIA) Corporate governance JS companies segregation into public and non- public, corporate actions reform, new corporate governance code adopted in 2014, listing rules based on the new corporate governance code, listing committees established Pension system guarantee fund mechanism introduced, investment horizon for non-state pension funds extended to 5 years Payment infrastructure Russian payment system infrastructure developed and currently in use by all leading international payment systems payment infrastructure monitoring and supervision 7

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