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. Last Updated: 07/27/2016

Falling Yields Said No Threat to Banks

Central Bank chief Sergei Dubinin said Wednesday that Russian banks would be able to survive the current drop in returns on government securities.

"What we have done over the last half-year to refinance the banking system has been designed to enable banks to turn to the Central Bank for Lombard or overnight loans to maintain liquidity under the new economic situation," Dubinin told Interfax.

Dubinin was speaking about the recent fall in yields on state treasury bills to under 50 percent. Income from the securities has been seen as instrumental in keeping many of Russia's shaky banks afloat.

The Central Bank head said the refinancing rate -- which now stands at 80 percent -- would be lowered "in line with the real situation on the interbank credit and Treasury bill market," where returns are lower.

Also Tuesday, Dubinin spoke at a founding meeting of the Association of Promissory Note Traders, where he said the volume of such bills in circulation was more than 20 trillion rubles ($3.7 billion) as of the start of July.

"Unsecured promissory notes are being issued more frequently, and theft and forgery are causing serious damage to this sector of the market," he said, according to Interfax.

He said the dealers' association could help bring needed infrastructure to the chaotic promissory note market.