It is prohibited by intellectual property law or in any\nway illegal use of this article, with heavy civil and criminal penalties for\nthe offender.<\/em><\/em><\/p>\n\n\n\n But this framework of measures is\nincomplete, and it is not enough to limit the phenomenon. The Russian\npopulation, and particularly over the last four years, has been experiencing a\ncontinuous decline in its purchasing power due to reduced wages being reduced\neach year, with the result that the low income classes are increasingly\nborrowing to be able to cope with the problems and expenses of everyday life.<\/p>\n\n\n\n The 30% of indebted households in order to repay their consumer loans are forced to spend more than 60% of their monthly disposable income. Essentially, the\nremaining amount of disposable income is not enough to cope with on its monthly\nsubsistence costs, so they have entered, this category of households and\nindividuals, in a vicious cycle of borrowing with high interest rates (consumer\nloans have high interest rates) to repay their previous loans, increasing in an\nexponential way their total debts.<\/p>\n\n\n\n The fact that more than 19 million Russian citizens living below the poverty line the drastic increase of this magnitude, due to heavily indebted households that will eventually go bankrupt, shows us the size of both the “bubble” in consumer credit and the size of the social problem that could lead to a social explosion.<\/p>\n\n\n\n On the other hand, many Russian\neconomists (with the right reason) believe that limiting the market credits\nwill reduce the level of consumption which will have a direct impact on the\ngrowth rates of the Russian economy. The level of unsecured appropriations in\nRussia reaches 9% of GDP when the equivalent size for Eastern Europe is double.<\/p>\n\n\n\n Consumer credits on low Incomes\nact as fuel for the demand and consumption and indirect support of any development\nof the Russian economy and given that the Russian economy has been affected\nsince 2014 by the sanctions imposed both the United States and the EU due to\nthe crisis in Ukraine.<\/p>\n\n\n\n Recently the Central Bank of\nRussia has announced that it will tighten the banking regulatory framework\nregarding the conditions for the allocation of consumer credit by banks to\nhouseholds and private individuals. The new proposed rules make the officially\ndeclared income the benchmark in relation to the total existing debt of the\nloan seekers as an indicator of the granting of loans.<\/p>\n\n\n\n But these new rules do not\ncorrect the situation of heavily indebted households that are constantly\nincreasing, since heavily indebted Russian households have two options either\nto declare a sudden bankruptcy with what it entails or to acquire loan with\nunbearable conditions from the shadow market that will sooner or later lead\nthem to bankruptcy.<\/p>\n\n\n\n The right policy should define,\nin addition to the measures imposed by the Central Bank of Russia, that all\nhouseholds and individuals who have been overcharged and proven based on their\nincomes cannot sustainably serve their debt should this debt be classified as a\nred loan.<\/p>\n\n\n\n Then after this loan has been cut\nby 15%-20% and depending on its size (it should be noted that the haircut of\nthese loans should be imposed as a penalty against the banks that while they\nknew the over-indebtedness of their customers continued to grant them loans).<\/p>\n\n\n\n The next step will be the banks\nto lengthen the remaining debt and after preceding the initial total debt\nhaircut, to repayment horizon in such a way that based on the stated income of\nthe borrower the monthly total repayment amount not to exceeds 20%-25% of the\nborrower’s monthly income.<\/p>\n\n\n\n In the event that in the future\nthe official monthly income of the borrower increases or decreases the monthly\ninstallment of the debt service will be adjusted accordingly with simultaneous\nreduction or increase respectively of the total repayment time so that the\nmonthly repayment installment of the loan to remain at the same level.<\/p>\n\n\n\n In this case, the monthly\ndisposable income which will be available for consumption will be drastically\nincreased in heavily indebted households in order to be able to live decently,\nwithout being forced to make new loans. Any social explosion is avoided,\nconsumption will increase to higher levels due to an increase in the disposable\nincome of the households concerned.<\/p>\n\n\n\n By this way is created a strong\nprotection framework for heavily indebted households and private individuals\nwithout limiting the growth of the economy.<\/p>\n\n\n\n Thanos S. Chonthrogiannis<\/strong><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" In the last year, Russia has seen a spectacular and continuous increase in consumer credits granted to households and individuals. This increase approximates 25%…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[859,5],"tags":[1021,1022,1019,1023,1024,58,1020],"class_list":["post-1136","post","type-post","status-publish","format-standard","hentry","category-economics","category-economic","tag-bank-of-russia","tag-bubble","tag-consumer-credit","tag-povery-line","tag-purchasing-power","tag-russia","tag-russian-economy"],"_links":{"self":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/1136","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1136"}],"version-history":[{"count":2,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/1136\/revisions"}],"predecessor-version":[{"id":1139,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=\/wp\/v2\/posts\/1136\/revisions\/1139"}],"wp:attachment":[{"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.liberalglobe.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2019\/09\/320px-Moscow_City_2019.jpg\")
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licensed Public Domain, https:\/\/creativecommons.org\/publicdomain\/zero\/1.0\/deed.en<\/figcaption><\/figure><\/div>\n\n\n\n