U.S. financial woes source of anxiety for Russia – Putin

(Interfax – VALDAI, Russia. September 19, 2013) Russia is worrying about the current state of the U.S. finance system with its “unbelievable sovereign debt and budget deficit,” Russian President Vladimir Putin said.

“How will the situation develop? This has a direct effect on the global economy, it’s a real source of anxiety for everyone,” Putin said at a meeting of the Valdai discussion club on Thursday.

“Don’t forget that Russia – there’s (former finance minister Alexei) Kudrin sitting there – has bought a lot of (U.S.) bonds of various kinds,” the president said.

“Lyosha, how much did you spend on bonds?” he asked Kudrin.

“The Russian Stabilization Fund is kept on foreign currency accounts at the Central Bank – we don’t buy securities, we just keep foreign currency on Central Bank accounts,” Kudrin answered. “The Central Bank trades about 50% of the gold and foreign currency reserves in the form of American sovereign bonds in the world market.”

“Our gold and foreign currency reserves now total 500-odd billion, and 40% is denominated in dollars now,” said Putin. “That isn’t of course, your Chinese trillion but is still pretty good money. It means that Russia has confidence in our American partners and confidence – I’m not being ironic – in the policy pursued by the American government.”

Putin defended Kudrin, who “was attacked, especially by left-wing parties, for keeping a significant part of the gold foreign currency reserves in the form of securities denominated in dollars.”

Putin commended the United States as well.

“We should do justice to our American partners: when we needed money, we got everything, in spite of all the domestic problems in the U.S. economy with the well-known mortgage companies. From the point of view of partnership discipline, our American partners did everything in a very disciplined way,” Putin said.