Russian Finance Ministry on meaning of 'people's bonds'
Russia's Finance Ministry plans to start sells of the first issue of government federal bonds for individuals, the Director of the Public Debt and State Financial Assets Department of the ministry, Konstantin Vyshkovsky, said, adding that new bonds can be bought in 700 Sberbank branches and 700 bank branches of VTB 24.
"Their placement will be preceded by an educational media campaign," the country's Deputy Finance Minister Sergei Storchak added.
The first circulation of securities will be issued in the amount of 20 billion rubles for a period of three years, the par value of each of them will be 1 thousand rubles. The minimum purchase amount of securities of one issue is 30 thousand rubles, the maximum - 15 million rubles. In the future, the Ministry of Finance plans to place bonds for individuals twice a year in the amount of 20-30 billion rubles annually.
Earlier, Vestnik Kavkaza noted that the project of issuing 'people's federal bonds' raises many questions to the selected terms of placement of securities and so far it looks rather doubtful than attractive for the population.
A professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, speaking to Vestnik Kavkaza, expressed confidence that there will be no rush demand for 'people's bonds'. "First, their volumes are limited to 20-30 billion rubles per year, which is thousands of times less than the volume of total bank deposits. Bonds themselves are not very convenient for the population, it is an incomprehensible tool, they are very volatile, because a change in the key rate will change the cost of 'people's bonds'," he pointed out.
In this regard, according to the economist, this project is a test run by the Ministry of Finance. "The exact reasons for the decision to issue these 'people's bonds' to the market are not quite clear. Officially, their goal is to increase financial literacy and familiarity with the stock market of the population, but the tool is too small and still too complicated for the target audience. The project looks like a poorly prepared action without any serious long-term strategy of working with the population," Alexander Abramov stressed.
The associate professor of the department of finance, money circulation and credit of RANEPA, Maxim Safonov, noted that the success of 'people's bonds' will depend on how actively they are promoted by the government. "If the Ministry of Finance can show their effectiveness - people will begin to invest in 'people's bonds' that will bring a specific income," the economist drew attention.
According to him, although the volume of the first issue will be small, in the future it can be significantly increased. "Those 20-30 billion rubles per year will not significantly affect the budget, but if the tool becomes popular, the volume of issues can easily be expanded to 100 billion rubles per year," Maxim Safonov said.
"There is a chance that people will see that 'people's bonds' yield income. As a whole, it is such a classic way of transferring savings of the population stored 'under the mattress' into a certain general state turnover. It is still difficult to forecast the result, but we should try," the associate professor of the department of finance, money circulation and credit of RANEPA concluded.