NBRB to raise barrier against financial pyramids

MINSK, 26 December (BelTA) – The National Bank of the Republic of Belarus will create an organizational and legal mechanism to prevent financial pyramids. The information was released by Chairwoman of the Board of the National Bank of the Republic of Belarus (NBRB) Ms Nadezhda Yermakova during the phone-in session and the online conference hosted by the BelTA website on 26 December.

According to Nadezhda Yermakova, there are two prongs in the effort to fight the emergence of financial pyramids. One of them provides for creating a mechanism to prevent financial schemes from evolving, for instance, by the introduction of registration of legal persons able to take deposits from citizens by the NBRB and by introducing the responsibility for violating the procedure. The work will be finished in H1 2013, said the NBRB head.

Raising the financial awareness of citizens is another important area. “Everyone must understand clearly that the operation of financial pyramids is aimed at taking away money of citizens, including by means of new technologies in the area of informatization and psychology,” stressed Nadezhda Yermakova.

In her words, the primary danger of financial pyramids is that their revenue can be generated only by depositors. Therefore, any financial pyramid is destined to fall. Once the inflow of depositors drops, the money to pay out profits to “old” deposits becomes scare and the pyramid falls, explained the NBRB head. Most enticing terms are the key attribute of pyramids, with interest payments way over the market average. If an organization produces nothing and provides no services but exists at the expense of deposits and new members, the organization is a classic financial pyramid, warned Nadezhda Yermakova.