Effects of virtual economy competitiveness national financial systems

The problems of modernization and innovatization of the Russian economy defined by the non-oil and gas development model are directly related to addressing the challenges of competitiveness improvement of the national financial system. The actual economic practice of recent years has shown that Russia's financial system is inefficient and does not provide a sustainable allocation of economic resources. A substantial gap between the financial sector and the real economy allows defining it as "virtual" economy. The purpose of this paper is to identify the problems that virtual economy creates for the Russian financial system and identify the ways of addressing them based on an analysis of the prerequisites and conditions for the virtual economy's development. The term virtual economy in this paper describes the financial sector's condition, which is characterized by such level of financial institutions' functioning that does not provide the required attraction of long-term investment into the real economy. The redundancy of the virtual sector in the domestic economy leads to structural and functional changes in the national system, which is indicated by the increasing gap between the virtual economy and the real. This results into an imbalance in the strategic development benchmarks of Russia, which is characterized by a shift from the development of the non-oil and gas model to a speculative one. This paper lists factors leading to a growing trend of accelerated development of the virtual economy. Given that market institutions cannot solve all the problems in the financial market functioning, in order to overcome the negative trends, it is proposed to strengthen the regulatory role of the state as an institutional intermediary that maintains the virtual economy. In this case, it is not a direct state control, but a co-regulation. The paper also defines the principles of state control of the virtual economy within financial policies undergoing modernization, which are aimed at improving the competitiveness of the national financial system. Within the country's financial system, an implementation of these principles requires adaptation and correction of forms, methods and technologies ensuring the strategic management of regional finances developed to support the non-oil and gas sectors of the economy. The proposed measures were suggested as an imperative for modernization of the financial system of Russia and its regions. This will provide stable, innovation-driven growth of the real economy in the long term, as well as competitiveness improvement of the national financial system at the global scale.

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