President Medvedev told aKremlin meeting of senior government financial officials and heads ofmajor private banks that the depth of the world's current market crisisexceeds even the most pessimistic predictions.
He says Russia made aconscious decision to join the global financial system, noting that ithelped the country's economic growth in recent years.
In recentdays and months, however, Russia has experienced substantial economiclosses. On Wednesday, when regulators suspended trading at midday,Russia's RTS Index of leading stocks had fallen nearly 6.5percent, adding to its 50-percent drop since June 1.
Analystsestimate investors have pulled more than $35 billion out ofRussia since the beginning of last month's conflict in Georgia, whichshook confidence in Russian markets.
Mr. Medvedev says Russia's adequate currency reserves and strong economy guarantee there will be no economic shocks.
Mr.Medvedev is proposing that the Russian government look into thepossibility of using up to 500 billion rubles, about $20 billion, tosupport market stability, including $250 billion held in reserve as partof the budget. He says this must be done immediately.
FinanceMinister Alexei Kudrin said liquidity problems at U.S. and otherforeign banks are decreasing the ability of Russian lenders to offercredit. He added that lower global oil prices are also impacting theRussian market. As a result, he says, there is a need to increaseliquidity in the financial sector and to stabilize accounts on thestock market.
Kudrin says the Finance Ministry has decided toincrease limits on deposits of temporarily unallocated funds from thefederal treasury in commercial banks. He says the limit was increasedWednesday to more than 1.5 trillion rubles, or $60 billion. Most of the funds, he says, are being provided to threebanks, Sberbank, VTB and Gazprombank, because these institutionssupport most of the country's financial operations and interbank credit.
Sberbankand VTB both suffered losses of about 20 percent before trading wassuspended Wednesday. Finance Minister Kudrin says markets will reopenFriday.
Russian Central Bank Chairman Sergei Ignatyev saysinterests rates will be lowered on a number of financial instruments byhalf a percent and in some cases a full percentage point.