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. Last Updated: 07/27/2016

Banks Unite to Endorse Freer Gold Market

Russia's Central Bank joined with leading commercial bankers Tuesday to endorse a speeded-up liberalization of the country's largely state-controlled gold market.

"We have to create a Russian gold market now," said Sergei Yegorov, the head of the Association of Russian Banks, pointing both to new investments in the country's troubled gold industry and increased liquidity in the banking system that could result from more liberal trading and export rules.

Addressing the same news conference, Central Bank deputy chairman Alexander Potyomkin supported a string of proposals put forward by the country's commercial banks, including the creation of a Russian precious metals exchange under the auspices of the Central Bank.

The banks also want the right to freely export gold as collateral for investments from abroad.

The Central Bank has taken over the regulation of much of the gold industry from the former State Committee on Precious Metals, disbanded in a government reorganization last summer.

Potyomkin said government support for the industry is likely to be cut back in next year's budget, underlining the need to attract private investments in the sector that has already seen output plummet by more than one-fourth this decade.

Central Bank management is particularly worried about the drop in the country's gold reserves, Kommersant Daily reported.

"These are serious moves on the part of commercial banks and the Central Bank to create such alternative mechanisms of financing" the gold industry, Potyomkin said of the banks' proposals.

A number of tentative moves to liberalize the gold market, however, have produced few results, bankers said.

Eight commercial banks were granted limited rights to export gold earlier this year, but according to Vladimir Vinogradov, president of Inkombank, one of the largest operators on the market, the permission has been held up by the State Customs Committee.

The Central Bank last month presented a set of new draft regulations

introducing so-called precious metals accounts that would make it easier for commercial banks to trade in gold on the domestic market.