Trojan horses of our time.

The second half of 2009-year media actively advertise the success in overcoming the financial crisis. It would seem to be afraid of nothing else, all more or less returned to normal. But is it really?

Consider the factors that could cause significant turmoil in the global economy and, thus, lead to significant exchange rate fluctuations:

1. CDS.

In 1994, bankers JP Morgan invented unregulated tool that will reduce bank reserves in order to extract additional profit through the use of the liberated capital. This tool was named CDS - Credit Default Swap (credit default swaps). Its essence lies in credit insurance and risk of default. After 14 years of unregulated derivatives bubble CDS has led to a crisis of the banking sector, put on the brink of ruin of the largest American insurance company AIG.

Nobody really knows the exact amount of CDS, are now in circulation. But even approximate figures and then pour over ice: it is believed that at the end of the second quarter of 2008, the CDS market was 15.5 trillion in the U.S. and 58 trillion in the world. Monstrosity of the derivative tumors can be present only in comparison: gross domestic product of the United States in 2007 amounted to 13.8 trillion, and GDP of the world - 54.3 trillion. But 58 trillion dollars - is only the visible part of the dark and mysterious iceberg on behalf of the CDS!

Nationalization of AIG and the unprecedented steps the U.S. government kept from bankruptcy system-companies and banks. But the bubble derivatives is still here. The problem remains, and awaits its decision.

2. Emission.

In connection with the financial crisis leading world powers have begun to issue new money. The media are trying to hide this fact, calling the issue "quantitative easing". The fact that these efforts demonstrates the willingness of the authorities to make this implicit information to citizens. After the huge issue of money, unsecured demand and real goods, can lead to high inflation. No new money will be linked in the banking sector and will spill over into the consumer market, changes in rates of major currencies may remain in certain reasonable limits. However, the guarantees that will not happen the same as the collapse in late 2008, one can not give. Everyone understands that money is getting cheaper and are prepared, in which case, get rid of those papers, which will look particularly weak.

3. Quasi-money.

There is an erroneous view that to issue money are entitled to only Central Bank (CB). In fact, this view is fundamentally mistaken. With little creative accounting banks have the opportunity create virtual quasi-money of debts, which are further used in the economy as usual, the real money.

Because making money out of nothing, it lucrative, all having such an opportunity use it without a twinge of conscience. Over the past fifty years, banks have created astounding debt pyramid virtual quasi-money. As long as investors do not take away from the banks of the pyramid for a critical mass of real money, the pyramid will stay. If investors begin to withdraw deposits, banks will take action for the repatriation of assets. What usually leads to significant market fluctuations.

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Capital Protection Group

Application of the provisions of bilateral international agreements on protection and investment guarantees

AGREEMENTS AND GUARANTEES FOR THE PROTECTION OF INVESTMENTSNG DORONINADoronin Natalia G.Leading Researcher, Institute of Legislation and Comparative Jurisprudence under the Government of the RF (IZiSP), Doctor of Law. Specializes in the legal regulation of foreign investment in Russia and in foreign countries.Born May 26, 1944 in Moscow. She graduated from the MGIMO Soviet Foreign Ministry (1967). From 1976 to present works in IZiSP.Author of numerous publications, including co-author of "Legal regulation of foreign investment in Russia and abroad", 1993.What is the content of legal relations in connection with investmentsthe authorized capital of credit organizations?The issue arose in respect of the bank with 100% of the French capital, so consequently there was a question on the application of the Agreement between the Government of the USSR and the Government of the French Republic, the Reciprocal Promotion and Reciprocal Protection of Investments <*> concluded in Paris on July 4, 1989--------------------------------<*> Bulletin of the Supreme Soviet of the USSR. 1991. N 48. Art. 1357.In answering this question should be guided by the definition of foreign investment, which is contained in the agreements on mutual protection and guarantee investments.This is due to the following. The norms of international agreements in force in the regulation of foreign investment, apply to investor relations on the territory of Russia on an equal basis with domestic law, as under Part 4 of Art. 15 of the Constitution of Russia universally recognized norms and principles of international law and international treaties of Russia are part of its legal system. In accordance with the same article of the Constitution of the international treaty shall apply, unless it establishes the standards that differ from the provisions of national law.Priority international - the legal guarantees granted to foreign investment, in present conditions of legal regulation of foreign investment in Russia is of particular importance, because due to the action of international obligations of the Contracting States can ensure stability in the regime of foreign investors. With the adoption in 1999 of the Federal Law "On Foreign Investment in Russia," the scope of the guarantees contained in the previously existing law on foreign investment, has been narrowed. Thus, in accordance with the new law to government guarantees do not apply to investments in the banking sector. In this situation, the rules of international safeguards agreements and protection of investment gain priority over national law on investment. Exceptions are the rules of special legislation for the banking sector.In Russia - the French investment agreement, or "investment" are defined as property (movable and immovable), proprietary rights, and property rights, shares and other forms of enterprises and organizations established in the territory of a Contracting State, corresponding to the general concept "property values", which must be invested or invested in accordance with the law of the Contracting Parties.In addition, the concept of "investment" includes indirect investments undertaken in the territory of the Contracting Parties, ie investments by the investor through a third country. The definition of "investment" also indicates that the change in the legal form of investment property values does not affect their qualification as an "investment", if that change does not contradict the legislation of the Contracting Parties.Broad understanding of "investment", or investments can be attributed to foreign (French) investment property of a commercial organization with 100% of the French capital to the category of foreign investment, which is subject to the guarantees provided by international agreement on mutual promotion and mutual protection of investments.In qualifying property values invested in the creation of enterprises and organizations on the territory of Russia as a foreign investment should be guided by the provisions in Art. 2 of the Agreement, which stipulates that "each Contracting Party under its legislation and in accordance with the provisions of this Agreement permits and encourages investment, carried out on its territory." This article delineates the relations associated with the investment relationship, concerning the admission and promotion of investment, and the relations arising in the implementation of investment.Admission and encourage investment in essence constitute an endorsement of the state action of a foreign investor, and hence the State's consent to the provision of appropriate safeguards, as invested with the approval of the state's property value should be classified as "investment". However, the said article contains a reference to the legislation of a Contracting Party with respect to tolerance and investment promotion.In accordance with RF legislation (both existing and in force at the time of the conclusion of the Agreement) to the provisions on the admission of foreign investment equals the registration procedure of commercial organizations with foreign investments (in the former Act it was an enterprise with foreign investment). At the time of formation of a commercial organization with foreign investments are subject to verification of its registration of a foreign person engaged in investment, followed by nested property values get qualified "investments".For banks the admission of foreign investment is defined in Art. 17 and 18 of the Federal Law of February 3, 1996 N 17-FZ "On Amendments and Additions to the RSFSR Law" On Banks and Banking Activity in the RSFSR "(hereinafter - the Banking Act). According to these articles of the state registration of credit institutions with foreign investments and branches of foreign banks shall take into account the additional requirements associated with the issuance of Bank of Russia the organization has licenses to engage in banking activities.Thus, following the provisions of Russia's legislation on customs establishment of credit institutions with foreign investment and expertise invested by a foreign bank property values as "investment", corresponding to the understanding of "the admission of investment" under Art. 2 of the Agreement, occurs when the registration of organizations such as credit organizations with foreign investments. On investments in such organizations, respectively, subject to the safeguards provided for in international agreements on mutual promotion and mutual protection of investments.In qualifying income derived from investments, as investments should be guided by the definition of "income" contained in paragraph 3 of Art. 1 of the Agreement, ie as "any amounts received as a result of investments, and, in particular, but not limited to: income, dividends, interest, license fees and compensation payments for technical assistance and maintenance.The Agreement does not indicate who receives these sums. In this regard, one should proceed from the fact that when it comes to investment in the form of commercial organization set up by Russia's law, and it is by registration of such an organization as a commercial organization with foreign investments was qualified as an investment, within the scope of the Agreement, proceeds of such an organization, should be treated as income, which are covered by warranty, as defined in the Agreement.With regard to the qualification of undistributed income as "re-investment", here we need to consider the following. Unallocated income received commercial organization with foreign investments in content are re-investment, or reinvestment. Although the Agreement did not contain a definition of reinvestment, but it provides that "income from investments in case of re-investment - income from re-investment enjoy the same protection as the investment" (paragraph 2 of Art. 4). This situation suggests undistributed earnings as of reinvestment, which enjoys the same international - legal protection as an investment (investment).The provisions of the Agreement suggest that there is no need for any special qualifications of undistributed income as capital, which is required in the implementation of the initial investment under the terms of his art. 2 (admission and promotion of investments in accordance with the law of the Contracting Parties). It is enough that the initial investment was appropriate qualifications for registration established by the organization as a credit organizations with foreign investment under the Agreement and internationally - the legal guarantees. At the same time, given the effect of additional requirements for the establishment and activities of credit organizations with foreign investments established by Art. 18 of the Banking Act, we can assume that the re-investment (reinvestment) in the banking sector in some cases requires special recognition as an investment.The establishment of additional criteria for registration of credit organizations with foreign investments due to the fact that investment in the field of banking activities requires compliance with the quota of foreign capital, which is set by statute and represents the ratio of total capital owned by non-residents in the charter capital of credit organizations with foreign investments and capital of foreign bank branches to the aggregate authorized capital of credit organizations registered on the territory of Russia. Moreover, by Abs. 3 tbsp. 18 of the Act increased the authorized capital of credit organizations registered at the expense of non-residents is based on the prior authorization of the Bank of Russia, received in the manner provided for in the Regulation on registration of credit institutions with foreign investment and the regulatory order to increase the registered share capital of credit organizations at the expense of non-residents, approved by order of the Central Bank of Russia on April 23, 1997 N 02-195.This provision does not apply if the re-investment was not associated with changes made in the charter capital.Can spread internationally --legal safeguards for property locatedowned commercial organizationwith foreign investment?The agreement extends a guarantee against expropriation and nationalization measures in cases of adoption and other measures that are intended to "deprive investors of the other Contracting Party of their investments" (Article 4 paragraph 3). Specified warranty covers a wide range of measures taken by the State, including measures directly related to foreign investment.The overall objective of safeguards is to provide a broad understanding of the categories of "nationalization" and "expropriation" in order to prevent the adoption of regulatory policies, which entail the same effect as the act of nationalization. International - Legal guarantees against expropriation and nationalization applies in cases where there is simply the seizure of all or any part of the investment of the foreign investor.Contents guarantee is that the investor - the owner of the investment compensated. In accordance with the provisions of paragraph 3 of Art. 4 of the Agreement in the event of expropriation and nationalization measures, these measures should be grounds for immediate payment of appropriate compensation. The agreement defines the amount of compensation payable. The amount of compensation should be equal to the real cost of capital on the day preceding the date of the enactment or promulgation of these measures.The amount of compensation paid to a foreign investor is defined in accordance with those agreed between the investor and the state, adopted similar measures agreement. If such agreement can not be reached, then another international - legal guarantee - in terms of the settlement of disputes provided for in Art. 7 of the Agreement.It should be noted that in terms of the settlement of disputes, including disputes relating to compensation to the foreign investor, there is a multilateral Convention on the Settlement of Investment Disputes between State and other States, signed at Washington on March 18, 1965 at Based on the Additional Protocol to that Convention, signed in 1979, the States - parties to the Convention allowed to seek additional means of resolving investment disputes. Among the additional funds for investment dispute resolution provides for the conciliation and arbitration procedures that apply in cases where one party to the dispute, not a state - a party to this Convention or is a person of that State. In addition, the conciliation or arbitration procedure may be used for such parties to the dispute, even if the dispute is not directly linked to investment, but beyond the scope of normal commercial transaction.The provisions of Art. 7 of the Agreement, stressing the peaceful way to resolve disputes and provide for recourse to arbitration, acting on the basis of the UNCITRAL Arbitration Rules do not prevent the investor's funds to settle the dispute referred to in the above-mentioned multilateral Convention. This conclusion is confirmed by a new model agreement approved by RF Government Decree of June 9, 2001 N 456 "On the conclusion of agreements between the Government of Russia and foreign governments on the promotion and reciprocal protection of investments." According to Clause 2, Article. 7 of the Model Agreement if the dispute can not be resolved through negotiations within six months from the date of the request of either party to the dispute to resolve it through negotiations, it is the choice of the investor may be referred to the competent court or tribunal of a contracting party or the arbitral tribunal ad hoc, or in the International Center for Settlement of Investment Disputes, established in accordance with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.Thus, the provisions of the Agreement on the definition of investment income from investments and provided investment protection and re-investment required to qualify the property created by a person of a contracting party commercial entity as an investment that is in the scope of the guarantees provided in the Agreement, if such an organization was registered as a commercial (credit) organization with foreign investments.Qualifying property organization registered as a business (credit) organization with foreign investment as "investment" can be extended to these investment guarantees provided in the Agreement on Reciprocal Promotion and Reciprocal Protection of Investments concluded between the Government of the USSR and the Government of the French Republic.LINKS TO LEGAL ACTS
"Constitution of Russia"(adopted by popular vote 12.12.1993)Federal Law of 02.12.1990 N 395-1"On Banks and Banking Activity"LAW OF THE RSFSR of 04.07.1991 N 1545-1"On Foreign Investments in the RSFSR"Federal Law of 03.02.1996 N 17-FZ"On Making Amendments and Addenda to the RSFSR Law" On Banks andBanking activities in the RSFSR "(adopted by State Duma of Russia 07.07.1995)Federal law from 09.07.1999 N 160-FZ"On foreign investments in Russia,"(adopted by State Duma of Russia 25.06.1999)RF Government Regulation dated 09.06.2001 N 456"Of an agreement between the RFAnd foreign governments on encouragement and mutualProtection of investments "ORDER CBR from 23.04.1997 N 02-195On EFFECT TO THE PROVISIONS OF THE FEATURES OF REGISTRATIONCREDIT ORGANIZATIONS WITH FOREIGN INVESTMENT AND THE ORDERPrior authorization BANK OF RUSSIA FOR THE INCREASEREGISTERED SHARE CAPITAL OF THE CREDIT FORACCOUNT OF NON-RESIDENTS "(together with the provisions of 23.04.1997 N 437)"CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES BETWEENStates and Nationals of OtherSTATE(ICSID / ICSID)(Signed in Washington 18.03.1965)"AGREEMENT BETWEEN THE GOVERNMENT OF THE USSR AND THE GOVERNMENT OF THE FRENCHRepublic on mutual promotion and mutual protectionINVESTMENT "(Signed in Paris, 04.07.1989)Law and economics, N 1, 2002