REPO Operations in the Russian Market: The Impact of the Evolution of the Practice of Refinancing Financial Assets on the Development of Property Relations

Abstract

The current stage of development of the Russian financial market entails a revision of views on traditional financial instruments. In addition, the participants of the Russian market can already formulate and solve key problems by analyzing the accumulated experience in order to avoid repeating mistakes. REPO operations in the last 25 years have greatly changed the landscape of the Russian financial market: if in the middle of the 80-ies of the last century they were used in the daily practice of refinancing only bankers who worked in Soviet foreign banks and have business relations with foreign credit institutions (there were very few), since the early 2000s they have become widely implemented in the practice of financial institutions, not only credit institutions. In addition, the treasuries of large companies in the non-financial industry also did not miss the opportunity to have in their arsenal an affordable tool to attract financing on acceptable terms. REPO operations are currently one of the main instruments of the Bank of Russia’s monetary policy. Are REPO transactions high-risk, why it is important to segregate clients’ assets from own assets and assets of financial intermediaries, and in what field is the vulnerability of this segment of the financial market—the questions to be answered in the article.