Банковские системы: России, Америки, Британии

England, Bank of

The Bankof England was incorporated by act of Parliament in 1694 with theimmediate purpose of raising funds to allow the English government towage war against France in the Low Countries (see). A royal allowedthe bank to operate as a joint-stock bank with limitedliability. No other joint-stock banks were permitted inEngland and Wales until 1826. This special status and its position asthe government's banker gave the bank considerable competitiveadvantages.

The bankwas located first in Mercers' Hall and then in Grocers' Hall, but itwas moved to its permanent location on Threadneedle Street in the1730s. By that time it had become the largest and most prestigiousfinancial institution in England, and its bank notes werewidely circulated. As a result, it became banker to other banks,which, by maintaining balances with the Bank of England, couldsettle debts among themselves. The bank was threatened by theeconomic instability that accompanied the, but its standing was alsoconsiderably enhanced by its actions in raising funds for Britain'sinvolvement in those conflicts.

During the19th century the bank gradually assumed the responsibilitiesof a central bank. In 1833 it began to print legal tender, andit undertook the roles of lender of last resort and guardian of thenation's gold reserves in the following few decades.

The bankwas privately owned until 1946, when it was nationalized. It fundspublic borrowing, issues bank notes, and manages the country'sgold and foreign exchange reserves. It is an important adviser to thegovernment on monetary policy and is largely responsible forimplementing the chosen policy by its dealings in the money, bond,and foreign exchange markets. The bank's freedom of action inthis regard was considerably enhanced when it was given the power todetermine short-term interest rates in 1997

TheColonial Office in the Bank of England,unsigned watercolour by one of Sir John Soane's draftsmen, c. 1818;in Sir John Soane's Museum, London.
By courtesy of the trusteesof Sir John Soane's Museum, London; photograph, R.B. Fleming

TheBank of Russia.

The tasks and functions of the Bank of Russia are set by theConstitution of the Russian Federation and Federal Law on the CentralBank of the Russian Federation (Bank of Russia). The Bank of Russia’smain objective is to protect the rouble and ensure its stability. TheBank of Russia is also the sole issuing centre and the body ofbanking regulation and supervision. Its main functions are formulatedin Article 4 of the Federal Law on the Central Bank:
- incollaboration with the government of the Russian Federation, itelaborates and implements a uniform national monetary policy designedto protect the rouble and ensure its stability;
- it is the onlyissuer of cash and the organiser of its circulation;
- it is thecreditor of last resort for credit organisations and organises therefinancing system;
- it sets the settlement rules of the RussianFederation;
- it sets the rules of conducting banking operationsand accounting and the reporting rules for the banking system;
-it conducts state registration of credit organisations and issues andrevokes the licences of credit organisations and the organisationsthat audit them;
- it supervises the activities of creditorganisations;
- it registers the issue of securities by creditorganisations in accordance with federal laws;
- it conducts, onits own behalf or on behalf of the government of the RussianFederation, all kinds of banking operations necessary for the CentralBank’s implementation of its main duties;
- it conductsforeign exchange regulation, including operations to buy and sellforeign exchange, and establishes the procedure for effectingsettlements with foreign countries;
- it organises and exercisesforeign exchange control on its own and through authorised banks inaccordance with the laws of the Russian Federation;
- itparticipates in making Russian Federation balance of paymentsforecasts and organises the drafting of the Russian Federation’sbalance of payments;
- it analyses and forecasts the state of theRussian Federation’s economy as a whole and by region,concerning specifically monetary, credit, foreign exchange, financialand price relations, publishes the corresponding materials andstatistical data and performs other functions in accordance withfederal laws.

TheBank of Russia co-ordinates and regulates settlement relations inRussia and establishes the rules, forms, deadlines and standards fornon-cash settlements obligatory for all legal entities and naturalpersons. The forms of non-cash settlements are determined by theCivil Code of the Russian Federation.

Theprincipal forms of non-cash settlements today are payment orders and,to a lesser extent, payment requests (for collection). Letters ofcredit and cheques are used on a small scale.

A part ofsettlements is effected by legal entities and private individualsusing payment cards, which are gaining ever wider acceptance.

The Bankof Russia is making efforts to ensure the effective and uninterruptedfunctioning of the settlements system and enhance its reliability.

Non-cashsettlements are effectuated through correspondent accounts openedwith the Bank of Russia, correspondent accounts opened by creditinstitutions with one another, correspondent accounts opened withnon-bank settlement credit institutions and through the systemofintrabank settlements, using inter-branch settlement accounts.

Russianlegislation accords the Bank of Russia a special place in thecountry's payments system. The Bank of Russia not only ensuresgeneral guidance of the payments system and provides the methodologyand organisation of settlements, but also directly participates inthis system, effecting interbank settlements through its divisions.

Thepayments made through the Bank of Russia settlement network accountfor a large part of the payments turnover.

Everyparticipant in the settlements effected through the Bank of Russiasettlement network is awarded an identification code. The Bank ofRussia keeps the Russian Federation Bank Identification CodeDirectory (BIC Directory), which contains the following data: thename of each credit institution participating in settlements and itsbank identification code, correspondent account with the Bank ofRussia and domicile.

The BICDirectory is regularly reviewed and updated.

The creditinstitutions located in the Russian Federation (resident creditinstitutions) and having the banking licence of the Central Bank ofthe Russian Federation open only one correspondent account with oneof the Bank of Russia institutions (a cash settlement centre oroperations department), which services them. The branches of creditinstitutions may have correspondent subaccounts to implementsettlements and may not have such accounts. If they don't, theyeffect settlements through the correspondent account of their parentorganisation or the subaccount of another branch.

Overall,the Russian payments system comprises about 1,400 resident creditinstitutions, more than 4,000 branches of credit institutions andnearly 1,200 subdivisions of the settlement system and it is theprincipal means of implementing the official monetary policy by theBank of Russia.

Non-cashsettlements of clients of credit institutions and their branches areeffected from the bank accounts opened with these institutions. Inspecial cases, stipulated by the law, legal entities may haveaccounts opened with Bank of Russia institutions.

Creditinstitutions and their branches with correspondent accounts andsubaccounts with the Bank of Russia effect settlements for theirclients for commodities, works and services and make tax and othercompulsory payments and their own income payments to the budget andpayments to the accounts of state extrabudgetary funds through thevarious divisions of the Bank of Russia settlement network.

As for thesettlements between clients of one credit institution (branch), theyare effected by writing off or entering funds to the clients'corresponding accounts, bypassing the correspondent account of thecredit institution (or its branch's subaccount) opened with a Bank ofRussia institution.

Settlementsbetween the cash settlement centres of the regional divisions of theBank of Russia, serviced by a single computer centre, on transactionsof credit institutions (or their branches) and on their owntransactions are effected through the accounts opened specially forthis purpose.

Thecorrectness of settlements effected by the cash settlement centres isconfirmed by the concurrence of the initial and reply turnovers inthe process of confirmation, that is by comparing each reply entrywith the initial one.

Paymentsare effected if there are funds in the correspondent accounts ofcredit institutions or subaccounts of their branches and within theamount of these funds. If a credit institution (or its branch) hasnot enough funds to meet all claims made on it, funds are writtendown from its correspondent account or from the subaccount of itsbranch to effect payments for its clients and its own payments in theorder established by the Civil Code of the Russian Federation. Inthis case, documents are put into the file of unpaid settlementdocuments, attached to the correspondent account of the creditinstitution or the subaccount of its branch.

Settlementseffected through the Bank of Russia settlement network are based notonly on paper, but also electronic payment documents. These are theso-called intra- and interregional electronic settlements. The latterare regulated by the Provisions on Inter-Regional ElectronicSettlements Effected through the Bank of Russia Settlement Network.The exchange of electronic documents through the Bank of Russiasettlement network is regulated by the Provision on the Rules ofExchange of Electronic Documents between the Bank of Russia, CreditInstitutions (Branches) and Other Clients of the Bank of Russia inEffecting Settlements through the Bank of Russia Settlement Network,adopted in March 1998.

Thedivisions of the Bank of Russia settlement network participate inelectronic settlements as the bodies registering and supervisingpayments.

Creditinstitutions, their branches and other clients of the Bank of Russiathat have correspondent or other accounts with the divisions of theBank of Russia settlement network may use electronic settlements.This helps accelerate money turnover and reduce the amount of fundsin settlements.

The term"electronic payment document" (EPD) is used in effectingelectronic settlements in the Bank of Russia settlement network. TheEPD is a document that serves as a legal basis for conductingoperations with the accounts of credit institutions (branches) andother clients of the Bank of Russia, opened with a Bank of Russiainstitution, bearing an electronic digital signature and having equallegal force, stipulated in an agreement with the Bank of Russia, withpaper based payment documents signed by the authorised persons withtheir own hand and stamped.

At presentthe electronic payment documents presented for execution to a Bank ofRussia institution must contain the requisites in accordance withwhich operations with accounts are conducted. Two kinds of EPD may beexchanged:

—full-formatEPD containing all requisites of a payment document, includingtextual requisites;

-abndged-formatEPD containing the requisites necessary for conducting operationswith accounts in a Bank of Russia institution.

Thetransfer of funds using fall-format EPD does not require accompanyingpayment documents on paper, while the transfer of funds usingabndged-format EPD must be accompanied by an exchange of paper basedpayment documents, filled out in accordance with the establishedprocedure.

During1999 the Bank of Russia plans to phase in a paperless technology inits settlement system, using full-format electronic payment documentsonly in the exchange of electronic documents between Bank of Russiainstitutions and between the Bank of Russia and credit institutions.

AfterJanuary 1,1998, the Bank of Russia charges a fee for its settlementservices. Some kinds of settlement operations are conducted by theBank of Russia free of charge.

Interbanksettlements effected through correspondent accounts opened by creditinstitutions with one another play a part in the general paymentturnover.

The rulesof settlement operations with correspondent accounts of creditinstitutions opened with other credit institutions are formulated inthe Bank of Russia Provisions on Effecting Non-Cash Settlements byCredit Institutions in the Russian Federation, which came into effectin 1998.

Theoperations conducted with correspondent accounts of correspondentbanks are divided into two types: operations to service clients andown interbank operations.

Thedevelopment of correspondent relations depends on various factors,such as mutual payment flows, price and demand in the credit market,the possibility of participating in trading in the regionalgovernment securities markets and on currency exchanges and the risklevels.

Specifically,settlements in correspondent relations are effected with creditinstitutions in CIS and other countries.

Settlementsthrough clearing institutions are one of the means of interbanksettlements.

Thedevelopment of clearing settlements depends on the financialcondition of credit institutions and the state of the money markets.Eight settlement credit institutions have been granted permanentlicence as clearing houses.

Clearingoperations are based on a clearing model requiring the participatingbanks to make preliminary deposits in their accounts with theclearing institution.

Nearly2,000 credit institutions and their branches and other corporateclients effect settlements through non-bank clearing institutions.

The Bankof Russia has a decisive role to play in elaborating the principlesof organising clearing operations and monitoring compliance withthese principles.

Intrabanksettlements are gaining acceptance. They include settlements betweena head office of a credit institution and its branches and betweenbranches of a credit institution. The procedure for conductingsettlement operations with inter-branch settlement accounts in Russiais established by the Bank of Russia Provisions on ConductingNon-Cash Settlements by Credit Institutions in the RussianFederation.

A mid-termstrategy for the development of Russia's payments system waselaborated in 1996. It sets forth as the main objectives of thereform of the system further modernising settlements, upgradingbanking technologies, introducing new instruments of payment, raisingthe standard of services provided to credit institutions and otherorganisations and creating conditions for liquidity management.

To raisethe banking technology of implementing settlements onto aqualitatively new level, new methods are being developed, new rulesand regulations are being enforced, new technologies are beingintroduced and new organisational principles are being established.Efforts are also being made to accelerate the introduction ofelectronic documents and build an advanced automated real-time systemof settlements.

To thisend, steps are being taken to determine the status and functions ofindividual subsystems for the implementation of settlements, enablecredit institutions to manage their liquidity more accurately,develop and introduce formats of electronic documents and settlementdocuments on paper, stimulate the functioning of clearinginstitutions, improve conditions for the introduction of bank paymentcards in order to reduce the amount of cash in circulation, andelaborate regulatory rules in these areas.

The Bankof Russia division responsible for ensuring methodologically andorganisationally the efficient and uninterrupted functioning of thenational payments system is the Methodology and Organisation ofSettlements Department.

Inaccordance with its Statute, the Department ensures theimplementation of the main tasks involved in developing and upgradingthe methods of non-cash payments in the Russian Federation,elaborating a concept of development of the Bank of Russia paymentssystem and organising supervision of the Bank of Russia settlementdivisions and other settlement systems.

UnitedStates, Bank of the

central bank chartered in 1791 by the U.S. Congress at the urging ofand over the objections of Thomas Jefferson. Extended debate over itsconstitutionality contributed significantly to the evolution of pro-and anti-bank factions into the first American politicalparties--respectively, the Federalists and theDemocratic-Republicans. Antagonism over the bank issue grew so heatedthat its charter could not be renewed in 1811. Reconstituted in 1816,the Bank of the United States continued to stir controversy andpartisanship, with Henry Clay and the Whigs ardently supporting itand and the Democrats ardently opposing it.

The first Bank of the United States was a cornerstone of Hamilton'sfiscal policy; it was a means to fund the public debt left from theRevolution, to facilitate the issuance of a stable national currency,and to provide a convenient means of exchange for all the people ofthe United States. It was capitalized at $10,000,000 and fullysubscribed almost instantly, with the federal governmentholding the largest block of ownership, 20 percent. A substantialinterest in the bank was also purchased by Europeans.

The bank accomplished all Hamilton had hoped for and also succeededin an unforeseen role: the regulation of private banks chartered bythe several states. At this time the issuance of notes was a moreconspicuous feature of banking than were deposits. Bank notes enteredcirculation as the money banks lent to their borrowers, and thesenotes comprised most of the total currency in circulation.

The rapid growth of the young country generated powerful demand forloans and tended to stimulate the overextension of credit. It was inthe general interest to restrain such overexpansion, and the bankimposed that restraint automatically. As the depository of thegovernment, with offices in the chief seaports and commercialcentres, it constantly received from collectors of revenue the notesof private banks by which monies due the government were paid. Asfast as it received such notes it called for their redemption in goldand silver by the banks of issue, thus automatically restricting theoverextension of credit and protecting the economy from inflation.Conversely, in periods of panic and deflation, the bank could easethe pressure. It was engaged precisely in what came later to becalled central banking.

Despite its successes, the bank met political opposition thatgathered force with partisan changes taking place in the country. Ingood part, this opposition was based on the very restraints the bankimposed on private, state-chartered banks; this was also seen as anaffront to states' rights, and the bank's federal charter wascalled unconstitutional. In 1811, when the 20-year charter expired,renewal was politically impossible. Its officers acknowledged realityand successfully sought a state charter in New York.

Within a few years, however, economic developments, chaoticconditions among the state banks, and changes in the composition ofCongress combined to enable the chartering of a new Bank of theUnited States with wider powers than before and with closer links tothe government. There was some early mismanagement, but in 1823 ofPhiladelphia became its president and the bank began to flourish.

Under Biddle, the central banking responsibilities were recognizedand developed as consciously as those of the Bank of England at thesame time--perhaps more so. But since these responsibilities usuallyhad to be exercised as restraints, private banks resented them andcomplained of oppression.

The rapid development of American industry and transportation wasenhancing the richness of the country's resources, and the idea ofdemocracy was beginning to connote to entrepreneurs the idea of freeenterprise and laissez-faire. Hence, the very conditions that madecredit restraint advisable also made it objectionable. Meanwhile, adeveloping agrarian populism, especially in the South and West, andamong the poor everywhere, was seeing in democracy opposition toprivilege and aristocracy and wealth. The bank became known as "themonster," and the enemy of the common people. These incongruousstrains against the bank united under the leadership of AndrewJackson, who became president in 1829. His attacks on it weresustained and colourful and rallied wide support. Attacks on thebank's constitutionality continued, although a decade earlier theSupreme Court, in McCulloch v. Maryland, had found thecharter constitutional under the doctrine of implied powers, leaderof the Whigs in the Senate from 1831, championed the bank against theJacksonian Democrats and in 1832 deliberately injected the bankquestion into the presidential campaign by bringing about therenewal, four years early, of the bank's charter, adopted by Congresson July 3. Jackson promptly vetoed the bank renewal act asunconstitutional, disdaining the Supreme Court decision and assertingthat officeholders were bound by their oaths to uphold theconstitution as they, not others, understood it. In a demagogic vetomessage he depicted the bank as the "prostration of ourGovernment to the advancement of the few at the expense of the many."

The bank issue dominated the campaign of 1832, in which Jacksondecisively defeated Clay. The veto stood, but the bank's charterstill had four years to run, so Jackson determined to scuttle itahead of time by withdrawing government funds from it. He shuffledhis cabinet twice before finding in Roger B. Taney--who as attorneygeneral had declared the move legal--a treasury secretary willing towithdraw U.S. deposits from the Bank of the United States and placethem in various state-chartered private institutions, which quicklybecame known as "pet banks."

The Bank carried on as best it could until the expiry of its charterin 1836, when it sought and won a state charter as the Bank of theUnited States of Pennsylvania. The long and rancorous affair becameknown as the, and Jackson's victory in it precluded for almost 80years--until the creation in 1913 of the FederalReserveSystem--any effective regulation of private banks in theUnited States.

FederalReserve System

centralbanking authority of the United States. It acts as a fiscal agent forthe U.S. government, is custodian of the reserve accounts ofcommercial banks, makes loans to commercial banks, andis authorized to issue Federal Reserve notes that constitute theentire supply of paper currency of the country. Created by the of1913, the system consists of the Board of Governors of the FederalReserve System, the 12 Federal Reserve banks, the, the FederalAdvisory Council, and, since 1976, a Consumer Advisory Council; thereare several thousand member banks.

The Boardof Governors of the Federal Reserve System determines the reserverequirements of the member banks within statutory limits,reviews and determines the discount rates established by the 12Federal Reserve banks, and reviews the budgets of the reservebanks. A Federal Reserve bank is a privately ownedcorporation established pursuant to the Federal Reserve Act to servethe public interest; it is governed by a board of nine directors, sixof whom are elected by the member banks and three of whom areappointed by the Board of Governors of the Federal Reserve System.The Federal Reserve banks are located in Boston, New York,Philadelphia, Chicago, and San Francisco, and also in Cleveland,Ohio; Richmond, Va.; Atlanta, Ga.; St. Louis, Mo.; Minneapolis,Minn.; Kansas City, Mo.; and Dallas, Texas. The Federal Open MarketCommittee, consisting of the seven members of the Board of Governorsand five members elected by the Federal Reserve banks, isresponsible for the determination of Federal Reserve bankpolicy in the purchase and sale of securities on the open market. TheFederal Advisory Council, whose role is purely advisory, consists of12 members, one of whom is elected by the board of directors of eachof the Federal Reserve districts. All national banks arerequired to be members of the Federal Reserve System, and state banksmay become members if they meet membership qualifications.

TheFederal Reserve System exercises its regulatory powers in severalways, the most important of which may be classified as instruments ofdirect or indirect control. One form of direct control can beexercised by adjusting the legal reserve ratio--i.e., theproportion of its deposits that a member bank must hold in itsreserve account--thus increasing or reducing the amount of new loansthat the commercial banks can make. Because loans give rise tonew deposits, the potential is, in this way, expanded or reduced.This policy tool has not been used very frequently in recent years.

The moneysupply may also be influenced through manipulation of the (alsocalled rediscount) rate, which is the rate of interest charged byFederal Reserve banks on short-term secured loans to memberbanks. Since these loans are typically sought to maintainreserves at their required level, an increase in the cost of suchloans has an effect similar to that of increasing the reserverequirement.

Theclassic method of indirect control is through, first widely used inthe 1920s and now employed daily to make small adjustments in themarket. Federal Reserve bank sales or purchases of securitieson the open market tend to reduce or increase the size ofcommercial-bank reserves; e.g., when the FederalReserve sells securities, the purchasers pay for them with checksdrawn on their deposits, thereby reducing the reserves of the bankson which the checks are drawn.

The threeinstruments of control described here have been conceded to be moreeffective in preventing inflation in times of high economic activitythan in bringing about revival from a period of depression. Asupplemental control occasionally used by the Federal Reserve Boardis that of changing the margin requirements involved in the purchaseof securities.