Putin Calls for Gold and Forex Reserves to Be Better Managed

President Vladimir Putin on Monday called for better management of the country's $484 billion gold and foreign exchange reserves, the world's third-largest, Russian news agencies reported.

"I ask you to prepare proposals on optimization of the management of the country's financial reserves, taking into account what is happening in the world economy," Putin told a Cabinet meeting.

Putin said he meant the country's gold and forex reserves, which include the $125 billion Reserve Fund and $32 billion National Welfare Fund, where Russia collects the revenues from its booming oil exports.

Putin is due to step down as president in May following the election victory of his anointed successor, Dmitry Medvedev, but said he is likely to stay as prime minister to ensure a smooth transition of power.

Putin said there was a need to create tools for long-term refinancing of the banking sector, which was hit by rising interest rates in international capital markets, but he did not elaborate.

"We have certain ideas. There will be no revolutions, but we need to react to what is happening in the world economy," Putin said.

Analysts say the country's oil wealth is likely to become the focus of a huge tussle between advocates of fiscal prudence, who want to invest it in safe foreign stocks, and interest groups at home, which want their own piece of the pie.

Putin has struggled to resist the pressure to spend the cash at home, and investors question if Medvedev, who lacks the political clout of his mentor, will be able to stop it being pillaged by vested interests.

The Central Bank, which manages the reserves, and the Finance Ministry, which manages the two oil funds, were not immediately available for comments.