Stabilisation fund turns to foreign currency

Russia's national stabilisation fund is being transferred into foreign currency accounts in preparation for international investment. The fund has grown significantly since its creation in 2004, set up to protect the economy from inflationary pressure by

The finance ministry directs how the fund is used, but the money is managed at the country's central bank. As it is switched into foreign currency accounts, the bank's role is increasing. Fund reserves will be kept in the form of interest-bearing deposits opened with the central bank – interest paid by the central bank. In return, the bank will invest what is deemed an adequate amount in certain assets. Analysts support the ministry's plan to invest in the United States and Europe – considered less risky than investing in Russia – but are concerned over government control of the fund. Those watching developments know the state has to secure the money, but not through speculation. Prudent management means the funds being removed from government hands. Similar reserves in Norway and Alaska are managed by independent financial bodies, with the country's governments represented on the boards. For now, though, the Kremlin is keeping full control of the money it's accumulating.