she's got a look at the calendar excitement in its southern melting switched trainers to keep you in top form and watch a lot on the go along carving the trail to sochi twenty four teams in technology update here. we've got the future. to have you with us this is our team from the russian capital top stories now at half past the hour affording a. strike against anti-government protesters again bringing the overall death toll in the raging on rest in libya to over a thousand. all rich middle east the world faces a surge in fuel prices threatening to drag economies into a new meltdown. in the wiki leaks founder slams british justice for handing him over to sweden sparking accusations of hypocrisy from the harbor u.k.

those facing serious challenges. plus it's a race for the hearts and minds of all olympic russians a step to choose the mascot for the twenty fourteen winter games in sochi. about with another update in less than fifteen minutes from now in the meantime the drive for modernization in russia is adding the men to. prove the country's investment climate but can become a global financial center or is it do remain a regional economy to develop these guys to discuss in this next in new program on the money. hungry for the full story we've got. the biggest issues get a human voice face to face with the news makers party. all over again welcome to on the money with the business of russia it is business today

we're talking about russia's financial modernizations its prospects and challenges and to do that i'm joined by electing with a of he is deputy head of research and head of the macroeconomics research team at v. capital and hark sunshine he is managing director portfolio investments at i it's the metropole also we have you here supply of she is chief economist on russia and c.i.s. b.m.p. perry par and we also turn to daniel salter he is chief eat any equity strategist at unicredit securities first alexei i'd like to go to you but not long ago a think tank in london came out with the following the london based zedd yen think tank which produces biannual rankings of global financial centers based on their competitiveness ranked russia moscow sixty eight out of seventy five i was in some temper of last year they said nothing has changed to today sixty eight out of seventy five it's not very good but it's not very good conquest president seventy

five and national financial center on the world of kind of sixty countries right so seriously i think that question has a unique. option here if russia doesn't screw things up and does things right in terms of setting up the environment and infrastructure it is a natural advantage of russia being a natural center for the tears says financial markets have been so you're saying first. countrywide then regional threats nervous regional all russian for four of the stage is regional center for countries firstly for the central asian countries then possibly for. or equally impossible to build with in fact there's one evidence of that which is bill is trying to replace a real blunt which is the first evidence so fresh of becoming somewhat of a financial center ok if i can go to you when you talk to your clients will be looking for what is the major problem may see one of the major problems he rushes infrastructure i'm totally not surprised that rush is right sixty to seventy five other i agree with alex say that they are there are they really seventy five

financial centers the problem here is infrastructure when you arrive at the airport the lines for passport control the house of getting to the center of town it takes hours to get to the center of town sometimes if you want to take a car unlike other financial centers i think the infrastructure has to need jestingly approved here improved here in russia before russia can lay claim to more than just a regional financial center you know julie you know you're an economist i mean it from a macro scale what do you think a major barrier is because we've heard we heard even back in two thousand and eight president invented want to make is one of his priorities now we had to go to the financial crisis russia has done reasonably well but if they learned anything from the financial crisis are we just right or in the same place we were back in two thousand and eight. i would fully agree that infrastructure is their main problem their main obstacle but at the same time i would also highlight importance on the

west on climate in my view. a lot of. garment to improve. sentiment about foreign and westerners and to boost importance of foreign investment in jail how. is not that simple and a lot of logistical problems for foreign investors in at the same time. a russia has a reputation that it is not fully in the western friendly country in general so i would. venture of problems with the table as well daniel for me which match the rhetoric with actions i mean i for do so for two years russia wants to become a major financial center and i even heard that your financial center what is being done is the actions and rhetoric matching him anyway. i think you're seeing gradual

progress being made we've seen recently the merger of the two main markets in russia the my six and the r.t.s. index that's one thing you've seen the ability now with foreign companies to list in russia using body art programs russian depository receipts you've seen big developments in terms of derivatives trading so things are progressing gradually there's still a lot of anything i can see if i could see with you then why are russian companies still listing bond issues on foreign exchanges here i mean there is that isn't attractive enough and what needs to change for that to happen. of for me the two reasons firstly it's very easy to list overseas you've got a lot of expertise you've got all the noise you got all the accountants all the all the legal experts overseas already in places like london and new york so it's a one stop shop you get all the all the services you need in one place the other what is in russia so we've still got a very underdeveloped domestic asset management industries and if you look at most

of the successful financial markets around the world you've got very strong domestic investors other either pension funds or insurance companies and that kind of. more stable money within russia is yet to really develop on a large scale alexia like one start sharp now that's what it's really all about isn't it here no absolutely absolutely but the point is that the factories iraq and the place where russia can get in and she's the russian is far less released environment because one stop shop for dot com for europe but over three just turned all sorts of things you don't have to list all the swaps you produce in invite you don't have to report on infringing agencies are not liable for their ratings and russian source force so i think that for some countries where it's not just able to produce a national context under some contract smaller companies for them with my dispersed the people gotten on to laura's a lot in accountants i think there because i cover the concerns of transparency for some people what question is whether the person who begins and so basically it's

actually. crystal's believes that interfet listen if you listen to you will present a lot in front of franklin to see it actually don't talk about conspiracy only they should talk about actually literally getting the migrants your definition works if you talk you listen to paul walker here's one from mark the way they're great that he wrestled as a point i'm sorry one who want to jump in there i totally disagree with alex in to see that the lack of regulation in the market is is a good is a great thing that would say well we could take that to the absurd and say well then the congolese are the cameron stock exchange would be would be even better. because when you have absolutely no regulation if you take a look at where where money is in the world a lot of this money is institutional money a lot of this money is sophisticated investors and in a market that's not regulated that under staking out sees words and saying that with a they don't perform due diligence at a certain level on companies then investors investors not even want to get involved in that market because they know the risks are very high and it's the same kind of

market that appeal the private placement sort of investors if you look at if you look at the world you see how many financial global financial centers do we need three to maybe once a coverage time zone so that there's always one working i mean there's a lot of competition to become a global financial center and i think that the way of saying that we have no regulation would would not be the approach that russia is going to take in order to increase its significance in moscow in particular to crease its significance as a global financial center. i don't know that i agree with you that no regulation i mean look at the congolese or i don't know whatever other stock market obviously it's local asians bit and she's not sure it's if they can go to put one third but i think that the americans and british know that how many patients you know and i know that move from a lot of singapore into three separate singapore has become christian capital of the world is this right you should that's not because of personal tax regulation because the hedge fund managers who are making huge amounts of money don't want to pay fifty percent plus taxes in new york or london your taxable. of course

a major issue of course but russia does have for this moment ok let's talk about going to julian want to talk about another issue that a lot of people talk about and that is the rule of law and this is an issue that is brought up often in dealing with russia are used to it one time be financial analyst at a major bank here in russia and i was back in the late ninety's and i still hear the same complaints to this day so julian what about the rule of law. he has a right a lot of complaints sansa thiessen is improving but improving very good a hillary as a result practice at least one more d t to. remove this problem so this is easier priming is crucial as he was a. global target is. russia. find themselves in the global south of this or it is possible to go back to where i'm likely to get a result in two three years. the main east where the. mother said

he said let me show and where they. are likely to continue all these efforts will improve this it and into the youth. law it is important not only of from the core and of your financial see after it is a more global problem for us ok that daniel if i can go to you i mean we hear a lot of what the russian government wants to do we hear the ministry of finance and other institutions and in other banks what they want to do but what are your investors saying they want to see happen in russia before they me move more money in there into this country because we all know there's a certain amount of dollars out there and then go to a certain number of places which can be the attraction to come to russia as opposed to another market. well i think it's the opportunity

investors will come to wherever they can buy stocks where they can trade them where their markets are liquid and where they feel protected and i think you know what you'll see in russia is that russians are. living longer life expectancy is increasing and so you'll see naturally over time russians looking to save money and that money in terms of pension funds and insurance money will be invested and put into the russian market and i think when you see that's happening these russian domestic investors will want to feel protected they'll once their domestic legal system. environments of the stock market to improve to protect their own life savings i think that is what will change the watsons and calls from investors to become more confidence in the environment where before going to recollect very interesting point to be talking about foreign investors all the time but russians are becoming themselves much more sophisticated in dealing with their finances because before you just put the money in the bank and you. can collapse in the one nine hundred ninety s. totally different environment today well i'm not sure i actually agree with that

and i have the financial services industry outside of banks have collapsed during the last crisis and the government has done a good job will not be inconsistent but they didn't do anything to see only the mutual funds and the insurance companies and so on life insurance mutual funds not just in russia that's a problem i completely agree with daniel here but also to some of the early comments from laurie after a short break we'll continue our discussion on modernizing russia's financial sector with our team. welcome to the. blizzard of winter blues should keep the slopes and try out some new textbooks bush has got a little calendar excitement in its southern melt switched trainers to keep you in

top form and watchful eyes on the goal line carving the trail to sochi twenty forty one technology update here on which we've got the future covered. would be so rich bryson. from stupid. stunts on t.v. don't come. down to be official anti allocation join the i pod touch from the. life. video on demand exceeds my old costs. as this feature now in the palm of your.

mission. to. welcome back to on the money time people about tree mind you were talking about what russia is doing to modernize its financial system but first let's have an overview of where russia is on this issue going where it's going. the global financial crisis which exposed the international banking system so russia overt catastrophe but they experience on the line they need to expand the domestic financial sector and provide a local own currency there's a loose things i'm going placements corporate russia takes overseas it is increasingly seen as essential but also s.m. compass and profound changes for the russian finance and corporate world it is

a question of survival for a country to build such a financial center for truck necessary for. and russia will depend on foreign investments for many many many years to come and to attract these funds you have to attract investors you have to track the foreign institutions you have to make the country. vote coming for an investment not just for them best. but to allow these foreign institutions to make money to be part of the environment to be properly treated there though being greater confidence in the legal system and protections for minority shareholders remains their priority is my holding out better than one leaf packed it during the economic downturn. experience. for an accredited local credit.

for an investor who's been already investors during this recent crisis we've got a situation where a lot of difficult negotiations have been held major restructuring. is all of them got together and negotiated difficult solutions yes some people lost money but for the most part the core essence of the contractual claims that they were entered entered into i did into were respected all thought needed to be an overhaul of national feelings and foundations development office that you should know investors and still are a services human capital and the range of financial instruments if you will not happen in the short term but only through further development can the financial system how to use of all of the with it and so you can on a growth that you're going to show up on the money are. ok but you talk about two issues that we haven't really mentioned and i could see here for us in

the studio let's talk about the ruble with the ruble needs to go for russia wants to become a financial center a major financial center and inflation here let's talk about both what is the ruble attractive enough to complement a financial center every financial center has a currency well that's a good point and i think that the crux of this of course is investment. because the old country can sort of transfer from there to invest in but not necessarily in this country to become financial center seven or seventy five i'm sure that there must be some. but nevertheless and so the point is that it's. with his predictability of the change for predictability of contra policy and instability and clearly a photo inflation is no creeping up a little around ten percent is a big problem. the problem for russia for a long time actually was a financial crisis that actually slowed it down for the first one privateer of the nubs absolutely and five i think that a lot of things for example the law central bank was divorced in one thousand nine hundred eighty and country changed in changes and that's

a major problem of those things it was a myriad of things which need to be addressed in clearly in order for us to become we would have punishment or is a place where people commonly some people come and invest in for the clean microkernel stability is one of the major apparently the sort of ok hark if i can do you is the government doing enough to deal with inflation and we have to look at oil prices are on the way back up in a big way you know i think that the governments of monetary policy has been unpredictable in the past if we look at a couple months ago we saw oil prices rising from a crisis level of let's say forty dollars to ninety dollars and we see the ruble barely reacting to that and in very high levels of inflation i think that the monetary policy in the government has been inconsistent and the. ruble exchange rate the ruble stability is unpredictable there is no stability and there are a large the in the foreign investment community i don't think there's much much faith or interest in the ruble as a as

a global currency let's look at the dollar for example compared to the ruble the dollar to take to extremes we see most we see almost we see a large majority of global financial instruments listed in dollars i think that i think the rubles a long way off from from becoming a global currency but as alex he said this is not necessarily necessary to become a become one of the to move up in the rankings from sixty to seventy five global financial so but ok julia but if i go to you certainly would be a nice plus if we had people who are attracted to the ruble as an exchange unit. well i also believe that russia has some advantage if it can seize of this currency say. no capital controls in the russian capital controls are very unlikely to be. used in future. in my view i would agree was a see as

a. microcosm of stability is it for me it is very important to have more a less predictable or a well to be sure. russia properly developed into a global financial center currently ruble is a very dependent on the oil prices rise a cycle of tiles. and that is this is unlikely to disappear in the coming years in my view as a result. of the garment just approach. where the position. of famous the least the where it is only sixty. eight from seventy five. and likely to result in some. practical outcome nevertheless. any movement in the idea of action there is very positive from my view and then if i go to you i mean i think. in

a conversation about finance and russia it always seems to give back to all which you know you. prices are going up there are certain people here that are very very happy and then there are a lot of other people the world that are on is it always going to be tied to the ruble and we always be tied to the price of oil and then we have the inflation factor is how is this a vicious circle we can be broken out of somehow. it's clearly going to be exactly seal for russia it is a commodity producing country the governments can try and stabilize the ruble by using things like saving the all surplus over seas as they've tried to do in the past that can help a bit like course norway does putting money into a stabilization fund into an overseas savings account i think but what also happened is that over time we'll see creation of long term investment products in russia you have long term pension funds looking for long term assets so long term bonds markets developing in russia and that will make things more stable as it will

mean the flows of money into and out of the ruble could become a bit less important when you have a bigger domestic savings space looking to buy russian. russian assets russian financial assets. much hearing about you here in the studio one of the things that really bothers me in living in russian i've been here for almost thirteen years is the lack of competition is there enough competition in the banking sector another key pillar of being a financial center is there enough competition in the banking so well i think that sentiment has worked very hard to establish that all the. liquidity and we obviously know this very different right and it's their bank and everybody else for it and you know well it was possible because different right so i think the process stuff but. even if i were them i mean how many how many banks or how wide variety of about of instruments that you can have when we look at retirement and we look at these kind of things here i mean

we still only a small number of people actually look at exactly i think that's exactly the point it's not the number of banks you have you have countries with one or two drinks working right and that's that's fine and point is there's really underdeveloped system more for saving completely completely group then you'll hear is there is life insurance mutual funds things like that as they develop as the government actually works courage ensure that people have trust in those things and fully funded pension system itself would be. if there is a to do in the country really progressed in our government talks about the medical system we don't so those things develop in the local settings because localism bases create or save the banks that's when they actually are the biggest corporation financial center is i think actually lies if i go back to you i mean with competition more in the marketplace here i'm up for russians within their market he would be more attractive for foreigners coming in here see if there is competition here because there isn't a lot in a lot of sectors well i agree with you i think that i think that increasing competition does not make the market more attractive it makes it less attractive but allowing the potential for competent competition certainly would. you know i

think that there are a lot of barriers to maybe not formalized but some have administrative barriers to to opening up shop here in russia and there's a lot of rules that keep competition especially foreign competition out of russia and i think that the definitely makes russia less attractive place for foreign investment and therefore a number sixty eight out of seventy five on the list again you have are you worried about more car competition in the marketplace will be make it more attractive for other people to come in here and make it a global center that mr madrid really wants it to be. i think competition is good because it breeds excellence usually the more competition there is the better the service standards are so therefore the more attractive it is it has a natural sense of russia will become people want to come to the best banks the best legal firms and solving the world's no there's clearly a risk that a couple of big stated this to sions could start to dominate. i think it's a good move in the short term you're creating

a domestic expertise base in investment banking but the challenge for the government will be to prevent the biggest situation becoming too dominant in the markets. going to finish over julia here i'm told it's candid diversity and debt that makes a city a marketplace financial center what needs out of those three what needs russia need to do most on a hierarchy what's the most important thing you can do the last word in the program . it is more transparent stable legislation. is a simpler. general election we still got a few seconds what would you say your your priority because i think the thing that really caused a lot of for a place where you kind of have some kind of exists but there's no actual death into it and that's i think what's really important and which is forest kind kind of people use concerns. well connectivity when you go to the right it's not much

better their bodies have actually much. fresh. but suppose i was much more i'm from much more ahead than the french in the seventy five or whatever. so i think that is for adults in the midst of a national base that especially if you work for all right ok we've run out of time i want to thank my guests here today and i want to thank our viewers for watching us here on on the money see you next time and stay with our team. more news today violence is once again flared up. these are the images and seeing

from the streets of canada. trying to corporations are all day.