Banks are preparing to cut rates following the Central Bank
Capital outflows don’t scare financial institutions
Bitcoin can shelter those seeking profitability
International consortium of news organizations developing transparency standards.
On Friday, June 19, the Central Bank of Russia cut the rate immediately by 1% to 4.5% to stimulate the economy weakened by the coronavirus.
However, such a radical treatment has its side effects. In particular, some experts believe that it will lead to a drop in the profitability of bank deposits and an outflow of deposits from the accounts of financial institutions..
Keeping money in banks will become unprofitable
When the regulator changes the discount rate, banks usually also adjust their interest rates on loans and deposits in order to keep their profitability at an acceptable level. Considering that the Central Bank’s rate cut was expected, many have already managed to adjust their lending and deposit terms. The rest are planning to do this in the near future, noting that when making decisions on the main banking products, they are primarily guided by the policy of the Central Bank, and only then by the market situation and the actions of competitors..
In the context of a pandemic and a drop in moves, citizens are forced to gradually spend their savings, and reducing interest on deposits will only accelerate the outflow of funds. However, banks have still and will continue to cut rates in order to reduce the cost of reduced financing..
According to the Central Bank data, published in the framework of the weekly financial analytical report, in the first ten days of June the average rate on deposits in the ten largest banks reached a historic low of 5.014% and will continue to move towards 3% per annum. This opinion was expressed by Sergei Grishunin, head of the rating service of the National Rating Agency (NRA).
“Such a significant decrease in the profitability of deposits will be due, in particular, to the fact that some large players already have deposits with rates below 4%. In addition, in conditions of extremely low interest margins, banks will strive to increase it, reducing the cost of funding through the channels where possible, “he said (quoted by Vedomosti).
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Bitcoin as salvation
A decline in the profitability of bank deposits amid falling stock indices and the devaluation of the ruble may increase the interest of Russian retail investors in digital assets as an alternative store of value. Since the beginning of the month, bitcoin has been consolidating in a narrow range under the $ 10,000 mark, but since the beginning of the year, the first crypto coin has risen in price by 30%, and its profitability has exceeded the profitability of all other assets in traditional markets. In addition, bitcoin is considered a hedging tool against inflationary policy of central banks, and this point of view is shared not only by ardent fans of cryptocurrencies, but also by representatives of the financial mainstream..
Proponents of the cryptocurrency haven theory argue that Bitcoin does not correlate with global capital markets and serves as a safe haven in times of crisis. Despite the fact that this hypothesis was called into question after the March collapse of the crypto market, it still has many followers. The closer the threat of inflation, the more people will come to cryptocurrencies to secure their savings.
BeInCrypto asked experts if cryptocurrency will become an alternative investment tool for Russians. The opinion of experts can be found below.
- Harutyun Nazaryan, CEO of Bistox Exchange cryptocurrency exchange;
- Sergey Mendeleev, founder of the Garantex cryptocurrency exchange;
- Sergey Zhdanov and a team of specialists from the EXMO cryptocurrency exchange;
- Ioann Voronin, Waves Exchange Advisor and Product Consultant;
- Dmitry Volkov, technical director of the CEX.IO crypto exchange;
- Gleb Kostarev, Head of Binance Representative Office in Russia and the CIS;
- Alex Altgauzen, CEO of the StormGain cryptocurrency exchange;
- Anti Danilevsky, CEO of cryptocurrency exchange CEO & Founder in KickEX exchange;
- Igor Snizhko, CEO of IEX cryptocurrency exchange;
At the time of this writing, one bitcoin can be bought for an average of 650 thousand rubles or $ 9,300. If you want to know where it is most profitable to buy bitcoins for rubles, read our review of the best crypto exchangers, and also come to our telegram channel.
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