Feb. 14 (Bloomberg) -- Russia needs to stimulate financial growth instead of increasing government oversight of markets, the head of the country’s financial watchdog service said.
“It’s very dangerous to pass such a huge new wave of regulation, really we don’t need more regulation, we need effective regulation,” Dmitry Pankin, head of Russia’s Federal Financial Markets Service, said in a speech in Moscow today. “In our past life, we had a very relevant example of the Soviet Union, when we tried to regulate everything, to introduce regulation in every process, but the result was that the whole system collapsed.”
President Vladimir Putin has backed plans to create a so-called market mega-regulator, as the government seeks to fold the federal service into the central bank. Russia may start combining Bank Rossii’s functions and the watchdog’s this year, First Deputy Prime Minister Igor Shuvalov said at a meeting with Putin last month.
While countries such as the U.S. and the U.K. need to diminish the size of their financial industries, emerging markets are still developing the institutions that need more oversight elsewhere, Pankin said.
“One of the tasks for Russia, for India, for Brazil, is to stimulate financial growth,” he said. “It’s not possible to make unified regulatory requirements for emerging and OECD countries.”
Russia is against reducing its reliance on ratings agencies, which have just started to become an important part of the country’s regulation, said Pankin, a former deputy finance minister. Pankin also said he thought it would be “totally wrong” to try to break up commercial banking and investment banking in emerging markets.