Why does Russia need an American public debt?
Tensions with the United States do not prevent the Bank of Russia from investing in US bonds. Although Washington is introducing one package of sanctions against Russia after another, the Central Bank believes that there are no special obstacles to investing money in United States treasury securities.
More than half of the Bank of Russia assets are currently invested in government securities of foreign issuers - this is about 51,3% of assets. At the same time, investments in US bonds grew during the year from 26,7% to 29,9% of the total assets of the Bank of Russia. In addition to investments in US bonds, the Bank of Russia is buying up debt obligations of the UK (their share increased from 5,2% to 7,2%) and Canada (from 2,3% to 2,8%). Interestingly, investments in government bonds of other leading countries of the world are gradually declining. Thus, the share of investments in German bonds decreased from 16% to 13,6%, and in French obligations - from 15,6% to 10,1%.
The Central Bank's dollar assets, despite the complicated relations between Russia and the United States, increased over the year from 40,4% to 45,8%, while assets in euros fell from 32,2% to 21,7%. In addition to dollar assets, the Bank of Russia is increasing its gold reserves. In 2017, the Bank of Russia increased its gold assets by 220 tons. Now they are 1808 tons. The accumulation of gold reserves can be considered as a safety measure - gold is always in price, so the larger the country's gold reserves, the easier it is to survive all kinds of economic crises.
Most experts agree that the Bank of Russia, even against the background of the current political the situation is right when buying American bonds. Firstly, they provide high returns and increase Russia's attractiveness for foreign investment. Secondly, in comparison with bonds of other states, American securities have obvious advantages. They are relatively stable, which increases their attractiveness for investment, have a high degree of liquidity.
Why stability of government bonds is important is clearly shown by the example of Ukrainian government debt, which Russia imprudently invested in 2013 by buying Ukrainian bonds for $ 3 billion. When a coup d'etat took place in Kiev, the new Ukrainian leadership refused to pay on these bonds, describing them as a bribe to the then president of Ukraine Viktor Yanukovych. Therefore, the Bank of Russia is very cautious, preferring not to get involved with developing and politically unstable countries in terms of buying their debt obligations. Against this background, the only alternative to acquiring American bonds can only be the purchase of debt obligations of some of the most developed and stable states in Europe and the world, which the Central Bank also does, acquiring securities of Canada, Great Britain, France, Germany.
More than half of the Bank of Russia assets are currently invested in government securities of foreign issuers - this is about 51,3% of assets. At the same time, investments in US bonds grew during the year from 26,7% to 29,9% of the total assets of the Bank of Russia. In addition to investments in US bonds, the Bank of Russia is buying up debt obligations of the UK (their share increased from 5,2% to 7,2%) and Canada (from 2,3% to 2,8%). Interestingly, investments in government bonds of other leading countries of the world are gradually declining. Thus, the share of investments in German bonds decreased from 16% to 13,6%, and in French obligations - from 15,6% to 10,1%.
The Central Bank's dollar assets, despite the complicated relations between Russia and the United States, increased over the year from 40,4% to 45,8%, while assets in euros fell from 32,2% to 21,7%. In addition to dollar assets, the Bank of Russia is increasing its gold reserves. In 2017, the Bank of Russia increased its gold assets by 220 tons. Now they are 1808 tons. The accumulation of gold reserves can be considered as a safety measure - gold is always in price, so the larger the country's gold reserves, the easier it is to survive all kinds of economic crises.
Most experts agree that the Bank of Russia, even against the background of the current political the situation is right when buying American bonds. Firstly, they provide high returns and increase Russia's attractiveness for foreign investment. Secondly, in comparison with bonds of other states, American securities have obvious advantages. They are relatively stable, which increases their attractiveness for investment, have a high degree of liquidity.
Why stability of government bonds is important is clearly shown by the example of Ukrainian government debt, which Russia imprudently invested in 2013 by buying Ukrainian bonds for $ 3 billion. When a coup d'etat took place in Kiev, the new Ukrainian leadership refused to pay on these bonds, describing them as a bribe to the then president of Ukraine Viktor Yanukovych. Therefore, the Bank of Russia is very cautious, preferring not to get involved with developing and politically unstable countries in terms of buying their debt obligations. Against this background, the only alternative to acquiring American bonds can only be the purchase of debt obligations of some of the most developed and stable states in Europe and the world, which the Central Bank also does, acquiring securities of Canada, Great Britain, France, Germany.
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