Interviews, INVESTMENT CLIMATE

Anatoly Aksakov: “We can not let our people engage in digital currencies trade”

This interview opens a new section of Invest Foresight, Investments Officer, intended to bring to the attention of our readers the views of the leading Russian experts on investment process and investment climate overall. The first person Invest Foresight interviewed is Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets.

Photo: zampolit.com

– Mr. Aksakov, what are the essential draft laws being developed nowadays that will, in your view, influence investment climate and investment process in Russia the most?

– First of all, it is the law on syndicated loans which is linked to the idea of project financing. That idea and implementation thereof is, in turn, linked to the law on the Bank for Development and Foreign Economic Affairs (VEB), which will expand the possibilities for that lender to engage in state-private partnerships. The said possibilities relate to selecting new projects in Russian regions and teaming up with other development institutions such as regular banks, private pension funds, etc. to unify resources. Insurance business reserves may be involved as well. Judging by the present-day situation, that is one of the key areas requiring our efforts. An adequate progress here will permit to launch national economy modernization as early as next year.

How do you see today the role of the federal budget as the financing source? Will that role augment in 2018?

– I believe that weight of the federal budget as a source of investments is quite insignificant. Most likely, the federal budget will remain a stabilizing factor in case of financial or political turbulence which will guarantee all social obligations of the state, whereas it will hardly become an economic growth driving force, or, at best, it may stimulate such growth indirectly by, for example, encouraging project financing through favorable interest rates.

The government is in turn disposed to accept the risks pertaining to drastic markets fluctuations or markets volatility, to a dramatic inflation surge, for instance, thus stimulating long-term investments.

– Nowadays, with lack of investments (and foreign investments specifically), should the importance of state owned banks as investors grow? As a member of VEB’s expert council, do you think VEB is a more efficient investor these days?

– Next year, VEB will become one of the major driving forces in investment projects financing and I believe that state owned banks in general should act in line with that trend. It is important for someone to initiate the process. You know, it is similar to sports, to long-distance race where there are always runners who ignite all others and set the overall pace. In a while, they may even leave the race letting the new competitors to lead it, but they nevertheless play a vital part by bringing about the initial impetus.

– Coming back to the lack of investments, do you see ICOs as an alternative channel for attracting investments? Should state authorities encourage usage of the said channel?

– I think the state must be actively involved with that. As a start-ups financing institute, ICOs must appeal to a broad strata of the population by employing the so called crowdfunding when individuals put their money together to finance implementation of an interesting idea. That is one of the areas – and a most promising one – which does not necessarily relate to digital currencies. Still, in this case, there should be some limit on the amount of the money to be attracted from the private individuals for a project implementation.

Another aspect is, ICOs must be arranged at licensed platforms with expert evaluation of the projects involved, in a manner identical to the venture financing practice. My personal opinion is though, that cryptocurrencies may be employed as instruments for project financing, but there should be restrictions on the access to such mechanisms; there may be some preliminary testing, for example, to make sure we find and involve not total laymen but people who know what it is all about, what they may gain and what the risks are.

– Will cryptocurrencies legalization improve, in your view, the overall investment climate? What is happening in that regard at the moment?

– As I see it, we can not fully apprehend the nature of digital money instruments, all I observe for now, are instruments with no cover, instruments resembling financial bubbles and multilayer marketing. Therefore, without comprehending and perceiving the true value of the said instruments, we may not let ordinary people engage in digital currencies trade. We must fully understand the nature of the phenomenon before we legalize it – or ban it, if we realize it can only bring about financial risks and nothing else.

– Do the authorities intend to regulate cryptocurrencies mining? There are rumors that cryptominers will have to be registered, that there will be limits on the cryptocurrencies purchase volumes, that digital moneys will only be sold by banks. How much truth is in all that?

– I would say, these subjects are being discussed but it is wrong to claim the issues have been decided once and for all. It is evident cryptocurrencies mining does exist and does develop, there are large production systems and there are people who invest serious money and make good profits. Such individuals are in fact involved in a business or entrepreneurial activity, but they pay no tax. That is why, in my view, cryptocurrency miners must be registered.

– It is widely believed that to improve investment climate, all market participants must be absolutely transparent. Should the authorities and market regulators specifically, compel businesses to be transparent? For instance, there is an initiative being discussed at the moment of judging a credit wellbeing of a borrower by his or her social media history. What is your attitude to that? Won’t we see too many abuses here?

– My opinion is that there should be both a stick and a carrot. There have to be advantages in being transparent, one should realize the more transparent one is, the more benefits one can obtain. It is quite clear though that some excessive transparency may not be to everyone’s liking, but we must encourage it. It should be noted that decisions by authorities are often late and lag behind. So I would be cautious about expecting authorities to move swiftly, they usually act with a delay as compared to the market where self-adjustment mechanisms are more dynamic.

Personally, I am present in social media, but I am sure access to my private information must be conditional on my consent.

By Sergei Iksitimov

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