Insolvency of Banks in russia: A threat to the economy?

After the collapse of the Soviet Union the banking sector in Russia was quickly developing and at the start of the twenty first century it consisted of more than 1,000 banks. Most of these banks had been established to serve the main business of the shareholders or for money laundering. Some, of course, did classical banking business, but frequent failures of such banks were harmful to the market. Finally, the Central Bank of the Russian Federation announced the new policy – strong financial requirements for the banks were introduced. The Deposit Insurance Agency became the liquidator of banks and since that time almost 70 bank licensees have been cancelled every year. Surprisingly, the process still goes on, and there are about 600 banks in the market. Less surprisingly, the Central Bank has been widely criticised for many of its activities in the field.