Russia: A market yet to emerge
| DOI | https://doi.org/10.1108/eb025006 |
| Published date | 01 February 1999 |
| Date | 01 February 1999 |
| Pages | 177-182 |
| Author | John Chown |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 7 Number 2
Russia: A market yet to emerge
John Chown
Received: 8th February, 1999
JF Chown & Co, International Tax Consultants, 51 Lafone Street, London SE1 2LX;
tel:
0171 403 0787; fax: 0171 403 6693; e-mail: taxchown@compuserve.com
John Chown studied economics at Selwyn
College Cambridge and is an Honorary
Fellow of the College, co-founder and
executive committee member of the
Insti-
tute for Fiscal Studies, and a Fellow of the
Association of Corporate Treasurers. He is
chairman of J F Chown & Co Ltd, advising
on international tax, and is at present
extensively involved in public policy work
on the taxation of financial markets in
Russia. His hobby is monetary history and
he has published 'A History of Money'
(Routledge 1994, paperback 1996) and he
is now working on a sequel provisionally
called 'A History of Monetary Unions'.
ABSTRACT
Russia is potentially the largest and most in-
triguing of the emerging markets but will it
ever fulfil its promise? There is little point in
describing
the detailed regulations at this stage;
but this paper begins by explaining the back-
ground to the August 1998 collapse. It goes on
to examine the prospects for the
re-establishment
of a sound currency, and the development of
sound banking and financial markets. These
will
require
action on tax, regulation and
corpo-
rate
governance and a combination of the West
being willing to help and the Russians to
accept
such help. The paper ends on a note of guarded
optimism.
Russia is potentially the largest emerging
market in Eastern Europe, yet today the
market is virtually dead. A year ago it
would have been worth writing a paper
setting out the details of the regulatory
structure: with luck, in a year's time such a
piece will be of great practical value.
Meanwhile, though, it is surely more inter-
esting to summarise the recent history, to
discuss w hat went wrong and to set out
some general principles which, though of
more universal application, have been
honed by recent experiences in Russia.
The key point to note about Russia is
that there are some very useful people,
well aware of what is needed, who are
dedicated to reform. Frustrated though
they may be by the politics, they somehow
keep hope that current problems will be
successfully resolved. The Federal Commis-
sion for the Securities Market in particular
has made a valiant effort to create a sensible
financial market infrastructure and to deal
with the notorious problems of corporate
governance and abuse of minority share-
holders, including complaints that 'trouble-
some' shareholders simply found
themselves 'tippexed out' of the share reg-
ister.
The old Soviet Union was a mess. The
'command' system collapsed, but there was
no market regime based on price signals to
take its place: bread prices had not changed
for 30 years and domestic oil prices were
one-fifth of world levels. At the beginning
of 1992 Gaidar and Yeltsin decided to go
for shock therapy, liberalising prices,
which were expected to rise two or three
Journal of Financial Regulation
and Compliance, Vol. 7, No. 2,
1999,
pp. 177-182
© Henry Stewart Publications,
1358-1988
Page 177
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