A brief assessment of Russia's treasury bill market

Abstract

Russia's treasury bill market has taken off in recent years.The volume of outstanding stock has grown manyfold, so that the volume of trading on the secondary market is now enough to ensure liquidity.The yields of treasury bills, which once fluctuated wildly in response to trends in inflation and political uncertainty, have now settled to low enough levels where they may actually help stabilize Russian financial markets.If this, happens, we may soon expect to see increasing investments in production capacity. The T-bill market is mainly regulated by the Central Bank of Russia, which uses treasury bills as an instrument of monetary policy.Meanwhile, the government of the Federation of Russia has increasingly sought to use the T-bill market as a source of revenue.As the Central Bank of Russia will no longer extend direct credit to the government, inflation has naturally fallen.However, if there are to be further cuts in the yields of treasury bills, the government would probably have to curtail its borrowing.For this to happen the government must cut expenditures even further or improve its tax collection systems.