| Valentin Treshchev | ||||||
Although even some of the most advanced of Europe's transitional economies have suffered spectacular banking crises as a result of directed lending to unprofitable enterprises, Belarus's small banking system has remained a sideshow during the tumult of recent years.
Because of the country's long period of high - sometimes hyper - inflation, deposits and assets are among the lowest in the region. At $2.4 billion, combined assets are equivalent to those of the tenth-largest Russian bank. And although there are currently 24 operating commercial banks, the lion's share of assets are held by a half-dozen specialized, "system-forming" institutions, all tightly controlled by the state. The banks have been routinely directed by the state to provide credits at unprofitable rates - sometimes at 100 percentage points below the effective refinancing rate. Many of these have gone to agricultural firms and other troubled borrowers, often with implicit but unenforceable state guarantees.