What does the refinancing rate depend on? What is the refinancing rate of the Central Bank of the Russian Federation

The value that allows you to work and build partnerships with credit institutions is called the refinancing rate. Let's try to understand what this is in more detail. The fact is that the Central Bank of the Russian Federation does not cooperate with ordinary citizens directly; it lends money to large commercial banks located in various parts of the state. In this way, the Central Bank compensates for the lack of material resources of small financial institutions. Thanks to lending, they get the opportunity to fulfill the obligations they have undertaken. The size of the refinancing rate determines how much on top of the loan commercial institutions of the Central Bank of the Russian Federation must return. Small banks, having received a loan from the state, lend money to their clients at a higher interest rate.

The refinancing rate is a regulator of the situation in the interbank market

When determining the interest rate, banking institutions take into account the refinancing rate, which subsequently plays the role of a regulator in the interbank market. The interest rate is of great importance when receiving credit money, not only for individuals, but also for legal entities. The higher the rate, the higher the interest on the loan that the borrower must pay. And vice versa, the lower the rate, the lower the interest rate entrepreneurs, businessmen and ordinary people can borrow money from the bank.

Interest and inflation

The size of the refinancing rate directly reflects the state of the state’s economy. It is as close as possible to the inflation rate. If inflation in the country is growing rapidly, then the rate will rise. The Central Bank reports this fact in advance. As soon as the indicator rises, no good should be expected. As a result, it becomes completely unprofitable to take out loans, people have less money, therefore, demand for goods falls, investments are reduced to zero, and production is reduced. A rate decrease indicates that the country is actively developing. People borrow and invest money in production, which leads to strong growth in the economy as a whole.

World situation

Every country in the world has its own refinancing rate. What kind of indicator this is can be seen from the previous section. In developed countries with powerful economies, the rate is very low. In some situations it may be zero. In some cases, the indicator plays the role of a fiscal meter, which serves as the basis for calculating taxes on income on deposits of both individuals and legal entities, as well as penalties and compensation for delayed wages. The amount of income from interest deposits that is 5% higher than the established rate is also subject to taxation. For every percentage that exceeds this figure, a tax of 35% is levied. Persons who have not paid taxes, fines and other fees must pay a penalty in the amount of 1/300 of the rate for each day of debt. The refinancing percentage is used to calculate the amount of compensation that must be paid to the employer in the event of a delay in wages, a delay in the payment of vacation pay or fees that are due to employees as a result of dismissal. The amount of debt is 1/300 of the refinancing percentage, which is paid for each overdue day. Here, the fact for what reason the employee was fired is no longer taken into account.

Why is it so important to know the percentage?

All citizens of the country should know the refinancing percentage of the Bank of Russia. The information allows you to determine when you can take out a loan from a bank on the most favorable terms. Knowing this indicator, you can avoid fraud on the part of the bank. And also, if necessary, defend your rights in the judicial authorities. You can find out what the Central Bank refinancing rate is today in the media. The values ​​of this economic indicator are published systematically, regardless of whether it changes or not. The refinancing percentage in different countries is equal to the following figures:

• Russia - 8.25%.
• Switzerland - 0.25%.
• Japan - 0.1%.
• UK - 0.5%.
• Eurozone countries - 0.25%.
• USA - 0.25%.

Important macroeconomic indicator

Federal funds rate, or refinancing percentage, acts as the amount of interest in annual terms that must be paid to the central bank of the state for loans issued by it to credit organizations. This category of loans allows us to ensure and regulate the entire banking system and its liquidity. Even in the absence of funds for lending to the population and fulfilling their obligations, the indicator maintains the solvency of each link in the structure. The macroeconomic indicator of the cost of money makes clear the level of credit availability. As a result, deposit payments may also change. If the rate is high and the inflation rate increases sharply, government authorities increase the rate. Economic development is slowing down. When it is necessary to accelerate the prosperity of the country, the percentage decreases.

Different areas of work

The role of a certain economic benchmark is also assigned to such an indicator as the refinancing rate. Let’s try to explain what it is from this perspective in simple words. Thus, the percentage is set by the Central Bank of the state for a reason, but after a preliminary and detailed analysis of the dominant macroeconomic parameters. This includes GDP, and a forecast for changes in GDP, and inflation, and a forecast for changes in inflation, and liquidity. Moreover, the established percentage itself has a certain impact on economic indicators from a completely different category. This leads to a significant difference in rates depending on the state. When the refinancing rate changes, the Central Bank must strictly follow the maintenance of a balance between the interests of depositors and borrowers. The indicator should remain at a level at which bank deposits will be attractive for depositors, and loans acceptable not only for enterprises and businessmen, but also for the entire population.

Rate in Russia

The Central Bank refinancing rate today is 8.25%, which is quite high and fully shows the situation that has developed in Russia. The indicator belongs to the category of important indicators of the credit policy pursued by the Central Bank. It is used to calculate taxes and penalties, making it the basis for a country's financial policy. The Central Bank refinancing rate was first set in 1992 on April 10. It was customary to call it the discount rate for centralized credit resources. In the period from 1992 to 1998, the profit indicator was equal to the interest on a pawnshop loan. It peaked between 1993 and 1994, ranging from 100% to 210%. Today, the economic indicator has been significantly reduced, and if there are changes, they are practically not noticeable.

Calculation formula

The bank rate (refinancing or key) can be calculated using a specialized formula, which is approved by the Central Bank of the Russian Federation. The indicator itself is an indicator of economic stability. The activities of many government agencies and commercial enterprises depend on it.

The formula for calculating interest is as follows:

Penalty = Amount * Rate /300 * Days

• The amount is the size of the loan.
• Rate - refinancing percentage.
• Days are the length of delay.

Key rate

On September 13, 2013, the board of directors decided to improve monetary policy instruments, such as the refinancing rate. What it was like before is discussed above. Today, the role of the instrument has been reduced, and it is mainly responsible for calculating taxes and performing a fiscal function. The role of the PS was assumed by the key stake. She was chosen from all the bids. The main indicator was considered to be the interest rate on repo auctions lasting 7 days. The calculation of the refinancing rate remained the same, and the value was fixed at 8.25%. The key rate (KR) has become a benchmark for calculating interest on loans by commercial banks. After the Central Bank of the Russian Federation increased the lending rate to 17%, the conditions for lending to the population began to tighten. Based on this, deposits whose income turned out to be higher than 13.25 per annum began to be taxed at 35%. The situation did not meet with approval among the general public, and therefore the government took temporary measures. The bank's rate (previously refinancing, but today the key one) became the root cause of changes in the tax code. In particular, the innovation affected ruble deposits, for which an increase in percentage points is provided from 5 to 10. Thus, until December 31, 2015, deposits in the national currency, the yield of which is less than 18.25%, will not be subject to taxation. At the moment, in Russia there continues to be an active tendency to increase the refinancing percentage, or the key rate, which is a natural consequence of the fading of the country’s economy.

Already from the name itself it is clear that the refinancing rate of the central bank of the Russian Federation is the interest rate on loans that the Central Bank provides to commercial banking organizations in the order of refinancing. According to the provisions of Art. 40 of Federal Law No. 86-FZ “On the Central Bank of the Russian Federation (Bank of Russia)” dated July 10, 2002, the term “refinancing” should be understood as lending by the Central Bank to domestic credit institutions.

In banking practice, refinancing is a procedure for returning loan funds using a newly taken loan. In this case, different goals can be pursued:

• Reducing the borrower's costs due to more favorable conditions for providing a new loan (for example, a lower interest rate). At the same time, commercial banks have the opportunity to change loan rates;
• Extending the loan period by obtaining a new loan - loan funds received from the Central Bank of the Russian Federation represent a source of additional funds that are used by commercial banks to lend to individuals and legal entities.

How is it formed

It is believed that the refinancing rate is formed under the influence of market processes. More precisely, the most active operations of the Central Bank. It is used in the course of interaction with commercial banks in Russia. In other words, the rate is a kind of “contractual” type mechanism that helps to identify the average cost of money. It is clear that the use of such a mechanism is carried out primarily for fiscal purposes.

At its core, the refinancing rate is the lowest loan rate that operates in the Russian Federation. The exclusive right to determine its size belongs to the Central Bank. To calculate the bet amount, it uses formula for calculating the refinancing rate, as well as rules that must be taken into account when establishing a specific refinancing rate. Firstly, its size cannot be lower than the inflation rate. Otherwise, the Central Bank will be in deficit at the end of the year. Secondly, in a situation where the country has a balance of payments surplus, the refinancing rate also increases. Accordingly, the balance of payments deficit leads to a decrease in its value. Thus, the Central Bank of the Russian Federation regulates (maintains) the internal macroeconomic balance.

Taking into account the above, we can say that the Central Bank rate is a tool through which the Central Bank of the Russian Federation has the opportunity to influence the size of interest rates on deposits and loans that commercial banks offer to clients. Hence, current refinancing rate- this is the indicator that domestic financial organizations primarily focus on when building their interest rate policy. By the way, today its size is 8%(effective from December 26, 2011 on the basis of Bank of Russia Directive No. 2758-U dated December 23, 2011 “On the amount of the Bank of Russia refinancing rate”).

At the same time, one cannot fail to note the impact of changes in the Central Bank rate on the financial situation of Russians. When the rate decreases, bank borrowers benefit. On the other hand, the loss for depositors is that they are deprived of a certain part of the profit that they receive from placing bank deposits. Any change in the rate is a sure sign that interest rates on loans and deposits may be revised in the near future. This is confirmed by an analysis of the behavior of banks in various time periods and corresponding changes in their programs.

Where is it used?

The most striking examples of the use of refinancing rates are:

• Taxation of income received as a result of placing deposits;
• Calculation of the employer’s financial liability in the event of delays in paying wages to the company’s employees;
• Calculation of the amount of penalties arising in the event of delay in fulfilling obligations to pay taxes or fees.

14 June 2016, 08:14 5008 0

Let's start with the fact that the refinancing rate is a fixed amount of interest, which is calculated on an annual basis, and is payable by the Central Bank of the country for the loan funds that the Central Bank provided to various credit companies. To explain in a simpler way what a refinancing rate is, it is the interest rate at which the Central Bank provided loans to banking institutions to issue money to individuals and legal entities.

Today, the refinancing rate of the Central Bank of the Russian Federation 2014 is about 8.25 percent. It is worth recalling that back in early March of this year, representatives of the Central Bank decided to increase the level of penalties on the refinancing rate to seven percent. This was officially stated in the official press release of the Central Bank. According to statements, the refinancing rate was increased so that there were no risks for further growth of inflation and maintaining financial stability.

Note that for lending to commercial institutions, the Central Bank uses repo auctions. The Central Bank refinancing rate today is one of the most important instruments of monetary policy of the Russian Federation. When the refinancing rate increases, this leads to a reduction in inflation. Further reductions in inflation, accordingly, lead to economic growth.

It should be recalled that back in the third quarter of last year, Central Bank employees decided, first of all, to focus on the key rate. According to them, the refinancing rate will fade into the background today. Moreover, by the beginning of 2016, it is planned to equalize the size of both rates.

Below is the change in the refinancing interest rate over several years.

HSBC: the refinancing rate needs to be made more stringent

Not long ago, HSBC Global Research experts spoke out about the refinancing rate in their quarterly study. In their opinion, the overall current growth in lending in the Russian Federation indicates the need to tighten the country’s monetary policy. It will be possible to reduce the interest rate only after the inflation rate has dropped significantly.

If the government wants to increase economic growth, it simply needs to remove some barriers to business, infrastructure barriers and ensure effective protection of property rights.

At the same time, some experts believe that the 2014 refinancing rate of the Central Bank of the Russian Federation should not be reduced, since this could lead to a new surge in inflation, which would entail an outflow of foreign capital. Moreover, the Russian regulator is trying to make the national currency more flexible. But nevertheless, the ruble continues to weaken against the general background.

According to the latest forecasts of socio-economic development, it is said that by the beginning of next year, the refinancing rate may rise to 17-19 percent. Also, the increase in new bank claims will have to be about 16-19 percent. Below we would like to show, for comparison, the size of the refinancing rates of various developed countries.

The refinancing rate today remains unchanged and is 8.25%.

Recently, the following trend has been observed: more and more people are interested in the economy, as they directly observe the impact of its laws and indicators on the current situation of both the country as a whole and individually each of its citizens. Modern conditions require access to a large amount of information, mainly thanks to the Internet. In order to understand exactly what is being discussed in the next news release, they will answer the question: refinancing rate - what is it in simple words? You can find out the answer from this article.

Refinancing rate - what is it in simple words: definition and features

The concept of a refinancing rate was introduced quite a long time ago. However, in recent years it has lost its influence as the key bet took over. However, a number of functions remained behind this instrument of monetary policy. This is a kind of indicator that serves as a determinant of the value of money in the country. It can be stated that the refinancing rate, in simple words, is an interest rate, the size of which determines the conditions under which Russian banks will cooperate with the population in relation to loans and deposits, since it is with this in mind that commercial banks receive credit resources from the Central Bank of the Russian Federation. If a commercial bank is able to obtain borrowed funds at 10% per annum, it can offer them to the public at 15% or 17%, with the difference being its profit. The higher the rate set by the Central Bank, the more the population will have to overpay for using the money of the servicing bank.

There are two main reasons that force banks to apply to the Central Bank of the Russian Federation for loans:

• the need to repay an existing loan, the terms of which are less favorable;
• the desire to receive funds that will increase the loan term.

The name of the rate itself indicates its initial value, because loan refinancing is, in simple words, the receipt of borrowed funds to pay off current debt, as a result of which new loan obligations arise, but on more favorable terms.

Additional functions performed by the refinancing rate

The refinancing rate also influences other processes in the economy. It is used if there is a need to display the overall efficiency of processes occurring in the country’s economy. It is worth noting that the rate is calculated not only on loans, but also on deposits. Moreover, its size plays a role in calculating the level of profitability of deposits at which it is not subject to tax (personal income tax definition).

In addition, the concept of refinancing rate can be found in such areas.

• In the Tax Code, where it is included in the calculation of the amount of fines and penalties for non-compliance with the procedure for paying established taxes and fees.
• It may be noted that the refinancing rate is used in situations where borrowed funds or value under loan agreements have been used, but interest is not specified.
• The liability that arises in case of late payment of wages to employees is also measured based on the established refinancing rate.
• This value is used when calculating special payments aimed at providing support to entrepreneurs.

Thus, we can conclude that such an indicator as the refinancing rate plays an important role in many ongoing economic processes. In general, it can be noted that its decrease has a stimulating function.

Each of us in life is faced with financial problems and ways to solve them. Sometimes this requires taking out a loan for a certain amount. Sometimes the question arises: why such high interest rates? Much depends on the refinancing rate. What is it and what is it for? Let's try to figure it out.

What is the refinancing rate?

So, when it comes to borrowing money, you should contact a commercial or government bank. After reading all the conditions and signing the contract, a financial amount is issued at a certain interest rate. Where does the bank get such large resources? Any financial organization can borrow funds from the Central Bank of the Russian Federation. The refinancing rate is the annualized interest at which the Central Bank issues loans to all commercial banks and other organizations.

How is this explained with a simple example? Let's say a financial institution lacks the material resources it has from deposits from the population. To obtain the necessary funds, the organization will not turn to competitors who provide finance at the same high interest rates. To reduce its costs, the bank enters into a loan agreement for a certain amount of money with the Central Bank. Such a deal is the most profitable, because the refinancing rate - the interest at which this loan is issued - is 8-10%. After the settlement period (1 year), the borrower undertakes to return the capital provided to him along with the accrued premium.

During this time, the organization uses the funds received to conduct various monetary transactions and issue loans at high interest rates. For example, if the Central Bank discount rate was 10%, then for clients it will be 19-25%. The resulting difference brings profit to the financial institution with which you work.

Important: the higher the refinancing percentage of the Central Bank of the Russian Federation, the higher the interest rate on deposit and loan payments for the population.

One of the functions of the Central Bank is the development of the banking system of the entire country. Thanks to this, financial organizations receive capital from outside on favorable terms. With income at their disposal, they can:

• reduce interest rates on loans for borrowers and increase their competitiveness;
• provide the client with more suitable conditions, such as extending the loan term and deferring payment;
• significantly increase your profits by issuing more credit funds, cash loans or mortgage loans.

What is the essence of this scheme and why cannot the Central Bank directly issue borrowed money? The answer is simple: the country's financial center is the lender for its entire credit system and therefore cooperates only with large divisions. It is profitable for him to work with amounts amounting to tens and hundreds of thousands. In this regard, he cooperates with a huge number of structures that have their own branches and branches and act as intermediaries in relations with capital.

Important: On September 13, 2013, a new concept was introduced in credit policy - the key rate. It determines the amount of interest in short-term loan transactions. Also, the interest rate plays a major role in the monetary sphere. Since 2016, the key rate has fully corresponded to the refinancing rate.

How is it determined?

The state of the current refinancing rate depends on the stability of the country's economy and the level of inflation. Inflation is an increase in prices for services and goods due to the depreciation of money and the depreciation of the national currency. Accompanied by a loss of purchasing power of citizens.

If the inflation rate changes, then the Central Bank changes its interest rate in proportion to it. When the interest rate on loans decreases, the number of borrowings begins to grow rapidly. This stimulates the economy of the entire country. It becomes profitable for clients to take out debt for small additional payments. Accordingly, the purchasing power of the population increases, goods and services are sold more and more.

This situation benefits medium and small businesses. Sales revenue increases, and with it production capacity increases. As a result, the number of purchases increases, the turnover of goods from sellers becomes greater, and they begin to raise prices. The last stage is when inflation rises.

The refinancing rate works as one of the ways to identify the market value of money. Its value can be assigned by default or through competitive selection. Having studied the history of the country's economy (since 1992), you can see that the key rate is related to the inflation rate. For example:

• For 2014, the rate was 8.25%, while inflation was 11.4%. The difference is 3.15%.
• At the end of 2015, the rate was 8.25% with inflation at 12.9%. The difference is 4.65%.
• In 2016, the rate increased to 10% with record low inflation of 5.4%. The difference is 4.6%.
• 2017 At the moment, the key rate is 8.25% along with inflation of 3%. The difference is 5.25%.

Why is it necessary?

What role does the refinancing rate play in the modern world of finance? It is the main government lever for regulating inflation. In what other processes does this rate appear?

1. The level of interest that commercial banks and organizations undertake to pay after receiving a loan from the Central Bank. Today, the Central Bank uses the value of the key rate when working with borrowing funds for a short time. If the loan term is set from 1 week to 1 year, the refinancing rate also takes part in such operations.
2. The main discount rate indicator reflects the state of the country's economy. Fluctuations in the refinancing rate index are reflected in additional payments on investments and deposits. Depositors should carefully monitor notifications from the Central Bank, as the final deposit amount may change significantly. In order to attract capital to the bank, interest rates are set for deposits at an indicator that is lower than the refinancing rate. Accordingly, to issue finance they use interest that is an order of magnitude higher than the established rate. This is the main income for banking institutions. A change in the key rate index leads to economic growth or decline, to increased inflation or, conversely, to its decrease.
3. Also, the amount of taxes for bank deposits depends on the percentage of this rate. When taxed, a rate of 35% is established on income from deposits and the excess amount, which is calculated according to the refinancing rate. Income of individuals is taxed in case of interest exceeding the rate by more than 10 points. All payments are made by the financial institution.
4. Used when the developer violates the rights of a potential home owner. For example, if the deadline for transfer of a finished property is not met without serious reasons.
5. Based on the rate indicator, the employer’s financial liability is calculated in the following situations: delay or non-payment of wages, vacation pay, sick leave and other payments on a legal basis. In such cases, monetary compensation is 1/300 of the Central Bank refinancing rate of the unpaid amount for each day of delay.
6. Using the value of the rate, charges are calculated regarding fines and penalties, payments for utility services that go to the state budget. This also applies to payments for various types of compensation to support small businesses or provide a tax credit. For both individuals and legal entities, penalties for debt payments of taxes or contributions are accrued at the refinancing rate. This value is used by default for calculating penalties. According to the Tax Code, the fine is calculated every day, and the interest rate is 1/300 of the refinancing rate of the Central Bank of the Russian Federation.

Important: If you learn about an increase or decrease in the key rate, think about the benefits that can be derived from such a situation.

When does the refinancing rate increase?

The value of the refinancing rate is one of the key factors in the state of the country's economy. The more the rate rises, the more the demand for investments from foreign investors increases. National banks provide an opportunity to increase interest on deposits, then it becomes very profitable for depositors to invest monetary resources in them.

On the other hand, an increase in the refinancing rate entails an increase in the cost of credit in the country, and therefore it becomes unprofitable for small and medium-sized entrepreneurs to obtain loans and receive money to increase production turnover. After raising the discount rate, unemployment may begin and there may be a decrease in the amount of monetary resources in free circulation.

When the Central Bank's refinancing rate increases, what reason could be behind it? The main point is the deterioration of the general economic situation. To stabilize the situation, they raise the interest rate. What results does this bring?

1. The Central Bank increases the refinancing rate.
2. For commercial and financial organizations, the price of money is rising.
3. Subsequently, interest rates on loans increase.
4. It becomes unprofitable to borrow funds - lending volumes are reduced.
5. Due to the low turnover of monetary resources, the purchasing power of the population is falling.
6. There is a decrease in demand for goods and services.
7. Sellers are slowing down price increases to restore sales levels.

This stops inflation processes due to a slight decline in economic indicators in the country. An increase in the main discount rate limits the economy's access to credit and foreign exchange resources. Ideally, the refinancing rate should be maintained at such a level that deposits generate income and the possibility of lending is available to legal entities (entrepreneurs) and individuals (ordinary citizens).

History of changes in the refinancing rate

Let us recall that this concept, from January 1, 2016, refers to the key rate indicator, which is equal to the refinancing rate. The independent meaning of the latter is no longer indicated.

So, what happened to the discount rate over 25 years?

• It was first set on January 1, 1992 and amounted to 20%, but did not last long at this level.
• During 1993 and 1994, the rate reached its highest value and amounted to 210%.
• From 1995 to 1996, the percentage fluctuated from 180 to 80 points and gradually decreased.
• During 1997, although the rate changed many times, at the end of 1998 it remained the same - 60%.
• Between 1999 and 2000, the rate continued to decline from the original 60% to 28%.
• From 2001 to 2002, the established percentage was 23 points.
• The years 2003 and 2004 are characterized by a constant reduction in the rate to 14%.
• At the end of 2006 the value was 11.5%.
• In the period from 2007 to 2008, there was a stable decrease in the rate by 0.5%, respectively, the value was 11%.
• After increasing the rate, which was 13% at the beginning of 2009, it decreased to 8.25% by the end of 2010.
• In 2011, its value remained almost unchanged and remained at 8%. Such stability was also observed in 2012.
• From 2013 to 2014, the rate underwent minor fluctuations and amounted to 8.25%.
• In 2015, the refinancing rate remained unchanged and was determined at 8.25%.
• By the end of 2016, the rate remained at 10%.
• At the moment, the latest key rate since October 30, 2017 is 8.25%.

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So, the refinancing rate is one of the main indicators of the financial condition of the state. It regulates many processes in the banking system. Therefore, before taking out a loan or making a deposit, consider the percentage of this rate and its state over the past few months.

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