WILL MIR CARD OPERATE ALL OVER THE WORLD?

National Card Payment System (NCPS) and Mastercard are negotiating the prospects for co-badging Mir Card with Mastercard, reported banking sources.

This partnership will enlarge Mir Card’s positions in the international market as one of the global payments systems, says PLUSworld.ru. About 40 million cards are likely to be issued, as banks will be giving out Mir Card to all civil servants since 1 July 2017. Civil and military servants should receive cards till 1 July 2018, pensioners – till 1 July 2020. As for civil servants, their account should be linked only to Mir Card. Now banks are issuing Mir-Maestro cards that are less comprehensive in terms of the services provided.

Answering the questions of PLUSworld.ru , NCPS told that they don’t want to give their comments on gossips around the initiative.

Back in 2016, NCPS and the Bank of Russia held talks with Visa that are still underway. For the moment, there are some verbal agreements on cooperation with JCB, American Express and Union Pay that haven’t come to any result so far.

MOSCOW MINT CELEBRATES 75TH ANNIVERSARY

The Moscow Mint, Goznak’s branch, marked on 25 April 2017 its 75th anniversary. In 1942, the Leningradskiy Mint, evacuated to Krasnokamsk since the Great Patriotic War broke out, was struggling to produce war decorations, orders and medals. Then the Council of People’s Commissar ordered to initiate the issuance of war medals in Moscow. A newly created Moscow Mint was provided with production facilities for issuing of medals and orders.

The prints works saw the launch of its toolmaker shop and production. The Krasnokamskiy Mint developed technologies, collected instruments to passed them over to Moscow.

Today the Moscow Mint, Goznak’s branch, is one of the largest issuers of coins and orders in the world. It is the main issuing authority responsible for all denominations of coins. Specialists of the Moscow Mint deliver high performance ensuring successful production of state and departmental awards, exchangeable and commemorative coins that are satisfying the needs not only of the Bank of Russia, but other Russian credit institutions and world central banks as well. (Source: Goznak’s press-service)

SWITZERLAND 50 FRANC WINS BANK NOTE OF THE YEAR AWARD

The International Bank Note Society (IBNS) announces that its voting membership has selected the Swiss National Bank to receive its prestigious «Bank Note of the Year Award» for 2016. With almost 120 new banknotes released worldwide during 2016, over half were of sufficiently new design to be eligible for nomination, IBNS was quoted as saying by INTERFAX.RU.

The Switzerland 50 Franc note is the first new design the Swiss National Bank has released in 20 years. While the Swiss 50 Franc hybrid note was the narrow winner, runners-up in very tight voting were the Maldive Islands 1000 Rufiyaa tortoise/whale shark, Argentina’s 500 Peso jaguar, and the Royal Bank of Scotland’s 5 Pound first polymer note.

Banknotes nominated must have been issued to the public (specimens and non-circulating currencies are inelligble) for the first time during the year of the award, and must have artistic merit and/or innovative security features, and be in general circulation.

IBNS was established in 1961. Now it gathers over 1.8 thousand members from more than 90 countries including Russia.

DUMA GAVE GREEN LIGHT TO MIR CARD FOR CIVIL SERVANTS

Civil servants should move to the Mir Card by 1 July 2018 and pensioners – by 1 July 2020. Following the third session, the MPs have passed a draft bill on Mir cards that should be issued to civil servants and pensioners. Mir cards are to be issued to all Russian residents since 1 July 2017, with civil servants and militaries should receive their wages via Mir cards by 1 July 2018 and pensioners – by 1 July 2020. Card holders will be provided with free-of-charge issuance and maintenance.

Earlier at the second session, the MPs agreed to suspend issuing of the Mir Card to retail with the income of 40 million rubles by 1 October 2017, says Interfax agency.

SHADOW ECONOMY IN RUSSIA

The annual share of hidden wages has reached up to over 10 trillion rubles, said Finance Minister Anton Siluanov at the ministerial meeting, TASS agency reports. «Hidden wages amount to 10 trillion rubles, said the minister. According to the official, this situation stems from a deep structural gap between the real and shadow economy.

As for possible options, the finance minister referred to raising indirect taxes and lower direct taxes, with greater transparency in business being considered as a one of the key solutions to this problem.

South Korea suspends coin issuing by 2020

South Korea intends to abandon coins by 2020, reports Plus.ru. Preparations for the pilot project are currently underway. If this to happen, Korean shoppers will be able to receive their change in the form of a top-up to their pre-paid cards.

Korea Times reports the central bank agreed on inviting several retail stakeholders to join the project. This includes CU и Seven Eleven. At these locations, shoppers can opt to have their change added to prepaid cards, such as public transport cards. In the future, the money could be deposited straight to bank accounts.

With the largest value Korean coin worth just 44 US cents, half of people polled by the Bank of Korea say they support a move to a coinless society. The move could also save money: last year the central bank spent $47 million producing coins.

BANK OF RUSSIA TO OPEN A NEW PAYMENT SYSTEM

The FinTech group (Sberbank, VTB, Gazprombank, «Otkritie», Alfa-Bank, NSPC and QIWI) headed by the Bank of Russia intend to create a national swift payment system (p2p), Director of National Payment System Department of the Bank of Russia Alla Bakina was quoted as saying by the newspaper Vedomosti. As she says, the system will allow people to make payments to other people for goods and services. These transactions will be limited up to 100,000 rubles and carried out via mobile apps or Internet adapted to this platform and, accordingly, to the payment system of the Bank of Russia (today only the banks are able to use this platform). According to Alla Bakina, payments could be carried out not only via banking cards, various options are now under consideration including bank account, cell phone, QR-code, e-mail, so forth.

Until this moment, a number of things remains uncertain including structure, payment methods, rates, terms for joining the system, transaction procedure, says Boris Kim, FinTech CEO, QIWI’s board chairman. The strategic plan is expected to be approved by the steering committee in June.

COUNTERFEITING IN RUSSIA

The Q3 2017 saw the number of counterfeits reached 12,447 ruble banknotes, says the Bank of Russia. The most counterfeited are the ₱5,000 banknotes (6 813 pcs.), followed by the ₱1,000 banknotes that are little behind (5 217 pcs.). The ₱10 note stands in the bottom of the list – only two counterfeits. As for coins, the statistics is the following: the ₱10 coins – 18 pcs., the ₱5 coins – 37 pcs. and one fake ₱2 note.

638 counterfeits of foreign currency were detected in Q3 2017: 371 fakes in March, 125 and 142 counterfeit note in January and February, respectively. U.S. dollars were the most counterfeited currency – 596 pcs, with euros, Chinese yuan and sterling pound being detected as well.

CASH DECLINES IN AZERBAIJAN

Since the beginning of year, the share of cashless transaction in Azerbaijan has inreased by 46% year-on-year, amounting to 51million manats. ATM and POS-terminal transactions stood at 168 million manats – a significant growth. Lawmaker Vakhid Ahmedov explains the Cashless Transactions Act is behind that trend. «Azerbaijan keeps a watchful eye on all issues relating cashless payments. We raised the question of cash domination on the country’s market more than once, with cash accounting for 70-75% of total transactions», the official said in an interview to haqqin.az. As he says, given all these circumstances, back in December 2016, the authorities gave green light to the Cashless Transactions Act setting out policies to reduce the number of cash transactions.

«For instance, the Act limits cash daily transactions up to 30,000 manats. Although there are still some problems that will be solved soon. Following the legislation approval setting cash limits, cashless transactions are already on the rise», Vakhid Ahmedov told.

He also added cashless transactions also depend on the tourist flow to the country, it is the recent efforts taken by the authorities that boosted non-cash sector.

OVER MILLION MIR CARDS ISSUED IN CRIMEA

The number of Mir cards, issued in Crimea, has reached up to 1.1 million, reported deputy chairman of the Social Insurance Fund Sergei Aleshenko at the round-table on the introducing of the Mir Card National Payment System. «So far, 1.1 million of Mir Cards have been issued in Crimea, with all our offices embraced», Segei Aleshenko told. Earlier this March, deputy governor of the Bank of Russia Olga Skorobogatova said more than 1 million of Mir Cards had been issued in Crimea. According to the official, almost 1.5 thousand of ATMs and over 8 thousand of POS-terminals accept the national payment instrument.

NO CASH IN INDIA

Despite monetary reform introduced 5 months ago, access to cash remains yet very limited in India. People are standing in extensive line to get cash in ATMs but local media outlets report it’s useless at all, as there is no cash in over 90% of ATMs in the north of India, while in the south this figure amounts to 65%.

State Bank of India’s deputy general manager Kumar Pandi said that customers don’t trust banks following demonetization crisis. He added 70% of ATMs have no cash, with banks struggling to refill them as a result of cash deficit.

CASH LESS PAYMENTS DON’T HURT CASH

Director of Goznak Research Institute Georgiy Kornilow shared his view on cash dominant position in Europe, according to the outlet PLUSworld.ru.

The opinion poll conducted by the European Central Bank, which comes after the introduction of the new €50 note, says that cash payment accounts for 75% of total transactions in the eurozone. The expert believes this adds to evidence a global trend for cash which has increased in numbers despite the uptake of cashless payments.

«75% of the total retail transactions in the eurozone appear to be carried out in cash. However, we have a totally different picture, if we look at retail transactions in terms of volume, with cashless payments accounting for the overwhelming number of total retail operations. In this regard, the European case has no difference with the rest of the world, says Kornilov. He also added that a majority of customers still prefer cash when making micro-transactions. As for average and small spending, here payment preferences change in favour of cashless instruments. However, we observe gradual fluctuations of preferences, as digital money and payment cards are actively paving their way to micro-payments.

Given the mentioned above, cash standing in this area remains unchanged. All recent studies highlight that despite the uptake of cashless payments, the number of banknotes in circulation has not only reduced but even increased so far. This also includes the countries that intend to set limits on cash usage. Cash holds solid positions in the payment system of these countries. It is trustworthy, easy-to-use, secure and anonymous. Cash allows making direct deals without third parties’ involvement and any access to means of communication. Finally, cash is supported by the State. Tell me any other payment instrument which could boast such advantages?»

Bank of Russia and Ministry of Education and Science to improve financial literacy in Russia

13 April, Governor of the Bank of Russia Elvira Nabiullina and Minister of Education and Science Olga Vasilieva signed a Roadmap Agreement on inclusion of financial literacy in curriculum of Russian education institutions. It was the first time since the Bank of Russia attended the ceremony at the 4th Moscow International Education Fair (MIEF).

The agreement, worked out by the ministerial task group, sets deadlines for proposals relating pre-school financial education; amending the current primary, general, secondary, secondary special and higher education curriculum; preparing training recommendation for all-level teachers, including supplementary education. All that must be done by 2017-2018, with financial education should be included in the Unified State Exam by 2019-2020. Professional and school competitions are expected to be held to encourage both teachers and students.

«The Bank of Russia puts financial literacy at the top of its agenda», Elvira Nabiullina pointed out. «We believe that in a modern society people should have knowledge and skills to make the right decisions in any situations when one makes a choice in favour of any financial products or services: loans, insurance of property or life, pensions or any operation when it comes to find the most efficient way to use your funds. People should be aware of financial products and services, as well as related obligations, risks and opportunities. I’d like to praise our joint efforts with the Ministry of Education and Science that allowed to help transform the promotion of financial literacy in education institutions from a separate initiative, although implemented more than once, into an entire large-scale campaign».

Minister Olga Vasilieva stressed that the joint agreement will lay the basis for regional agreements, as financial education is expected to embrace all-level curriculums.

Earlier last year, the Bank of Russia also launched its pilot projects on financial literacy in the 72 regions, with the number of involved schools to reach up to 500 all across Russia by 2017. With the support of the Continuous Support and Training Academy of the Ministry of Education and Science, a special program was developed, with 300 people having participated in it. Financial literacy was also included in the curriculum for teachers of social science at colleges of education in Moscow.

STATE DUMA TO GIVE GREEN LIGHT TO BICOIN

The Duma’s task group, jointly with other Russian financial institutions, are underway to set out a draft bill giving green light to Bitcoin in Russia and establishing a legal framework for a stock exchange that will operate with Bitcoin, Dash, Ethereum, Monero and other digital currencies. Russian authorities and respective agencies are very confident about this initiative, head of the Bitcoin task group Elina Sidorenko was quoted as saying by the newspaper Vedomosti. She said although Russia was considering a ban on digital money, today the authorities are set for developing this sphere.

«We should support Bitcoin users through facilitating transactions. At the same time, we’ll have to ensure security on the exchange markets. It is important to prevent money-laundering and transferring of assets to financial heavens. We intend to lay the ground to allow Russia developing its stock exchanges for digital currencies», told Elina Sidorenko.

The Bank of Russia point out it is currently negotiating with concerned agencies over a general stance regarding cryptocurrencies, as they plan to discuss regulatory measures for digital money.

KAZAKHSTAN IS YET FAR AWAY FROM «CASHLESS SOCIETY»

Kazakhstan can abandon using cash, yet isn’t able to do that. The National bank has recently joined the debate initiated by economists who believe that it is the very time for Kazakhstan to shift to cashless payments. The regulator supported this idea. According to its press-release sent, this is a mater of future. Banks are definitely willing to introduce no other payment methods but cashless even tomorrow. They have technologies that are successfully operating. However, there are some problems on this way. The most important – Kazakh people themselves. They are get much used to pay in cash everywhere, so that they don’t even have any alternative on their mind. As experts say, a whole revolution will have to break out before plastic replaces paper money.

« I don’t think that this idea is feasible in the near future», says economist Aydarkhan Kusainov. «I will go even further by saying that it is right to pursue this goal, as planning won’t do any wrong, but it is not the matter of today. Here we should work out measures to prepare people psychologically. And, of course, we should increase the number of ATMs. However, we shouldn’t expect any revolutionary changes in the number of cashless payments».

The bank’s statistics say that retail is the most active user of cash, with notes and coins accounting for 80% of payments. Although there is some progress on this: banking activity allowed to increase plastic cards’ usage (6 time higher). Online-services and mobile apps, introduced everywhere today, contributed to this growth as well.

CASH ACCOUNTS FOR 8.6% OF US GROSS DOMESTIC PRODUCT

Despite cashless payments spreading their wings thanks to plastic cards and online payment systems, the number of circulating notes and coins continues to grow in the U.S., the Wall Street Journal was quoted as saying by FINMARKET.RU. Cash as a percentage of U.S. gross domestic product stands at 8.6%, the highest level since the early 1950’s. The same trend is observed in Europe, Japan and Australia.

The experts say the shadow economy, flourishing all over the world, is most likely to be behind that paradox: tax evasion, organized crime and financing of terrorism. Digital payments could be more fast and efficient; however cash ensures anonymity of transactions.

Europol in its report of2015 said that «while cash becomes less attractive for consumers, this leaves a choice for criminals».

«The Federal Reserve System has been aware that the majority of the $100 notes are circulating outside the U.S. One doesn’t need to delve into depth to understand that cash is used to finance illicit activities», said Princeton University’s economist Allan Blinder who held the office of Deputy Governor of the Federal Reserve 1994-1996.

Such frustrations gave rise to last year’s movement against cash worldwide. The EU decided to discontinue production and issuance of €500 notes. India withdrew from circulation Rs 500 and Rs 1000 notes to fight corruption. Over the recent months, South Korea and Venezuela joined the list who introduced cash limits. However, the United States aren’t inclined to such measures. That, in particular, is explained by the fact that 8% of people have no bank accounts in the USA, as a result they aren’t embraced at all by digital economy.

RUSSIA TO LEGALIZE BITCOIN BY 2018

The Russian authorities are edging closer to legalizing bitcoin and other digital currency transactions to fight money-laundering by 2018, Deputy Finance Minister Alexey Moiseev said in an interview to Bloomberg. «The state needs to know who at every moment of time stands on both sides of the financial chain», he said. «If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations».

As Banki.ru points out earlier last February Deputy Governor of the Bank of Russia Olga Skorobogatova told that the Bank of Russia jointly with the Finance Ministry would come up with a proposal to introduce digital currency regulation. At the same time, she said that so far digital currency transactions are at the lowest level in Russia and the regulator don’t need to take urgent measures.

Bitcoin is known as the most popular digital currency introduced in January 2009. However, Bitcoin is being pulled aside due to legislative restrictions imposed by some countries.

Bitcoin constitutes «digital money» – program online-code that is out of reach of any country or issuing authorities. One of its specifics is that Bitcoin allows to ensure complete anonymity of a person or a group of people involved in online shopping.

NEW €50 NOTE WITH IMPROVED SECURITY

The European Central Bank (ECB) has introduced the new €50 banknote with improved security features, said  president of the ECB Mario Draghi, reports the ECB’s website.

 

ECB chief said the €50 note is the « most important denomination», with over 9bn of €50 notes being in circulation. He noted that this accounts for 46% of all the euro notes.

 

Mario Draghi pointe out that the new €50 banknotes have an improved security features inherited after the new €20 note. He said that the new note is more user-friendly for visually impaired people. Draghi explained that the banknote features bolder large letters and tactile marks near the edges.

BANKING MEETING IN MOSCOW

The Association of Russian Banks (ARB) gathered its members in the Pillar Hall of the House of the Unions in Moscow to discuss «Development instead of stagnation. Competition as main leverage of economic growth». This topic was chosen for the banking meeting as it is competition that contributes to gradual economic growth, as a whole, and banking system, in particular.

Banking system is a part of economic processes that shows weak and strong points of the Russian economy itself which continued to shrink in 2016: declining household income and capital investments, as well as other negative trends. As a result, we observed the retrenchment of banking sector as well due to objective (market) factors, state policy (a large number of licensees revoked), non-competitive regulatory measures taken by the state for controlling banks (setting limits on banking activities with regard to capital), immature practice of banking preventive audit. All that have resulted in a considerable decrease of competition.

In this relation, the Association of Russian Banks came up with the initiative to discuss at the meeting creating opportunities for functioning of the banking system aimed at development of its institutional basis: capitalization, competitiveness, banking legislation and law enforcement, regulation and control, banking ethics and other issues. This approach will allow establishing an efficient model of the sustainable growth of Russia’s banking system.

The delegates of the meeting heard the reports of ARB’s President Garegin Tosunyan and Governor of the Bank of Russia Elvira Nabiullina.

A detailed report on the meeting can be found in the May issue of Banknotes of the World.

President Putin proposes extending term of Russia’s Central Bank Governor Nabiullina

Russia’s President Vladimir Putin has submitted the nomination of Elvira Nabiullina to the State Duma, who will stay in the office of Governor of the Central Bank for a second term, the President told to Nabiullina on 22 March. «I have submitted your nomination to the State Duma for the post of Governor of the Central Bank of Russia». The Head of State noted that Nabiullina was appointed Bank of Russia’s Governor in a difficult period for national and world economy. «Since then the Bank became an important regulator,» stated the President pointing out that Russian economy is at great extent relying on policies performed by the Bank of Russia. «Given this complicated period, no matter what steps are taken by the Bank of Russia, both expert community and general public keep an eye on its activities.» «Opinions always diverge on how and what is done by the Central Bank», the President said. «Nonetheless, it’s obviously clear that the Bank of Russia achieved great results to maintain economic stability as a whole, both in banking system and financial sector under your direction».

In her turn, Head of the Bank of Russia pointed out that the Bank of Russia is expecting to be authorized to hand over banking secret documents to law enforcement to bring criminal charges against malevolent bankers. She said that law enforcement doesn’t often find substantial grounds to launch charges on tight deadlines, as they are only able to receive correspondent data related to banking secret once investigation is launched.

«If we have the evidence of criminal offences, we propose to hand over banking secret documents for sooner investigation of such cases to bring charges against the owners and managers of those credit institutions within the shortest possible time»,— Prime agency refers to the explanations of Head of the Bank of Russia. Putin notes that it would allow to «guarantee deposit return». Nabiullina confirmed that it will contribute to deposit return, as bankers, few days before the revocation of license, usually begin to «move out assets, and, therefore, the rights of depositors and creditors should be protected».

INDIA LIMITS CASH

India’s government plans to limit any transaction in cash to Rs 2 lakh (about $3,000), with penalties for exceeding this ceiling expected to be introduced, TASS agency reports. Revenue Secretary Hasmukh Adhia told that the government was intended to tighten current regulations that is to be approved in the parliament.

«The government has decided to lower the cash transaction limit to Rs 2 lakh from the Rs 3 lakh proposed in the Budget last month. Exceeding of this limit will bring charges», told the official. Adhia noted that any spending above will invite a penalty equivalent to the amount of the transaction.

This February, Indian government announced its plans to introduce charges against any cash transaction over 3 lakh (almost $4,600) as of 1 April 2017. This measure is expected to fight corruption and illicit funds.

Anti-corruption initiative goes in line with the government’s policy launched last November when the most popular 500-rupee and 1,000-rupee notes were withdrawn from circulation ($7.5 and $15). The country saw a crisis of cash deficit that hit its population. However, the authorities insist only strict measures will put an end to corruption.

CASH LEAVING RUSSIA WILL BE LIMITED TO 15,000 EUROS?

Head of Rosmonitoring Yury Chikhanchin proposed to introduce limits on cash leaving the territory of Russia that shouldn’t exceed 15,000 euros. He pointed out people carry up to 60 million at once when leaving Russia, with the customs couldn’t stop them from doing this. As for the moment there are no limits on cash leaving Russia, at the customs control people just need to declare an amount exceeding 10,000 dollars.

Head of Rosmonitoring stressed that in 2012 the country saw 10 billion dollars in cash crossing its borders, as Interfax reports. Since 2013 the legislation entered into force in Russia brining criminal charges against those who have undeclared amounts of cash when crossing the EU borders. The penalties are 15 times higher than the undeclared amount of cash.

BANK OF RUSSIA OPENS ITS FIRST REPRESENTATIVE OFFICE ABROAD

The representative office of the Bank of Russia in the People’s Republic China (PRC) was opened in Beijing on 16 March, the press-service of the CBR reports.

Russian and Chinese relations have achieved a level of comprehensive and strategic partnership. «Our mutual links have considerably strengthened over past years, and cooperation on financial issues is an integral part thereof,» said Dmitry Skobelkin, Deputy Governor of the Bank of Russia, at the opening ceremony.

«While it is our first overseas representation, the Beijing office of the Bank of Russia is not the first office of a foreign central bank in China, which hosts representatives from 12 various central banks», said Andrey Denisov, Ambassador Extraordinary and Plenipotentiary of the Russian Federation to the PRC. «The leaders of our countries share a clear vision of the need to enhance Russian and Chinese financial cooperation.»

2016 was a watershed year for the relations between the financial regulators of the two countries. They signed agreements of understanding on anti-money laundering and combating the financing of terrorism, and on creating a settlement and clearing centre for yuan settlements in Russia. The centre will be opened in Moscow on 22 March. Another memorandum of understanding was signed by the Bank of Russia and the China Securities Regulatory Commission. Work is underway to implement the insurance cooperation plan for 2016-2018. In September 2016, the National Payment Card System (NPCS) and UnionPay signed a cooperation agreement on co-badged cards.

«The representative office will become the front office for interaction between financial regulators, it will facilitate more efficient partnership relations, boost joint projects opening up new avenues for cooperation, and help to promptly address any issues that may arise,» stressed Dmitry Skobelkin. «I am convinced that this office will be a starting point for a new stage in the Russian-Chinese partnership,» remarked Yi Gang, First Deputy Governor of the People’s Bank of China.

NEW 12-SIDED £1 COIN TO BE ISSUED IN MARCH

The Royal Mint plans to launch the new 12-sided £1 coin(8th March). The official issuance is fixed on 27 March. The new coin is to replace the current «round pound» coin, which has circulated since it replaced the banknote of the same value in 1983.

The new £1-coin project was devised due to a significant level of counterfeiting; it is estimated that out of more than a billion pound coins currently circulating, more than 40 million are counterfeit that stands for one fake for 30 genuine coins.

The new coin, which is entitled «Nations of the Crown 2017», includes a new design that won the competition in 2014. Its author, David Pearce, was only 15-year old then. The design of the coin reflects the historic legacy of the UK. According to the tradition, the obverse will include the effigy of HM Queen Elizabeth II as designed by Royal Mint engraver Jody Clark. The reverse will feature the English rose, the Welsh leek, the Scottish thistle, the Nothern Irish shamrock, all emerging from a royal coronet. The design was devised by David Pierce, himself.

The new shape of the coin was made according to the latest mint technologies. The Royal Mint’s patented High Security Feature has added to its reputation as the most secure coin in the world. A hologram image is used in minting process to ensure the shift of images from «£» to «1», when tilted.