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Elvira Nabiullina’s achievements as head of Russia’s Central Bank

Логотип TASS TASS 08.06.2017 TASS

MOSCOW, June 8. /TASS/. On June 9, 2017, the plenary session of the State Duma, lower house of the Russian parliament, will consider the extension of the term of office of Elvira Nabiullina as Chief of Russia’s Central Bank.

Below is the TASS factbox on her main achievements of head of the financial regulator from 2013.

Revoking licenses from troubled banks

When Elvira Nabiullina became the head of the Central Bank on June 24, 2013, she made it clear that the regulator was going to improve supervision over national banks.

Since July 2013, the Central Bank has begun revoking licenses from troubled banks and non-bank credit institutions.

In total, licenses were withdrawn from 324 banks and non-bank credit institutions. For reference: as of June 1, 2013, there were 956 credit institutions operating in Russia. By May 1, 2017, there were 600 of them.

Among the banks that had their licenses revoked, 12 were on the list of 100 largest banks in terms of assets.

According to the documents of the Central Bank, the most common reason for the revocation of licenses was the banks’ involvement in dubious transactions. The regulator revoked licenses from 161 banks on that ground.

As a result, since 2013 the volume of shady transactions on the balance of payments of the Russian Federation has significantly decreased. If in the first half of 2013 the amount of such transactions was $17.4 bln, in the second half of 2016 it decreased by 42 times and amounted to $405 mln.

Ruble's exchange rate

After the decline in oil prices in autumn 2014 and the subsequent sharp weakening of the ruble, the Central Bank started large currency interventions. From October 2014 to February 2015, in order to stabilize the ruble exchange rate the regulator sold $44.5 bln on the domestic foreign exchange market.

Unlike in 2008-2009, when the Central Bank managed to bring the ruble back to its pre-crisis positions, the policy pursued by the Central Bank's management resulted in the ruble weakening against the dollar and the euro.

For reference: on June 24, 2013 the dollar was worth 31.79 rubles, and the euro - 41.44 rubles.

On June 9, the dollar rate is set at the level of 56.99 rubles and 61.15 rubles for the euro. (Drops of 79% and 48% respectively).

Inflation targeting

On refusing to maintain the ruble exchange rate by currency interventions, the Central Bank switched to inflation targeting. In other words, the regulator set the goal to achieve price stability.

In 2013, annual inflation in Russia was 6.5%. Under the impact of falling oil prices and the weaker ruble, prices rose by 11.4% in 2014 and by 12.91% in 2015. However, already in 2016, the consumer price index in Russia amounted to 5.4% at an annual rate - a record low in modern history of Russia. The Central Bank expects that by the end of 2017 inflation will be just above 4%.

Key rate

Under Elvira Nabiullina, in September 2013, the Central Bank set the key rate (the annual interest rate the regulator sets on loans it issues to commercial banks, rates on all other operations of the Central Bank are pegged to this rate)

Since that moment, the change in the key rate has become the main instrument of the Central Bank to ensure financial stability in Russia.

Initially, the Central Bank's key rate was 5.5% and was kept at that level until the spring of 2014. Following the conflict in Ukraine, the weakening of the ruble, the growth of inflation, the sanctions imposed against Russian companies, and other factors, the Central Bank began to raise the key rate. In December 2014, it raised the key rate to 17%.

On January 30, 2015, the Central Bank cut the key rate to 15%, explaining that the previous rise led to stabilization of inflationary and devaluation expectations. Subsequently, the key rate was repeatedly reduced and on April 28, 2017, it reached 9.25%.

Number of employees

The average number of employees of the Central Bank of Russia declined in four years by 13.8%, from 63,500 in 2013 to 54,700 in 2016.

Criticism and support

Nabiullina was often criticized for her reluctance to maintain a stable ruble exchange rate with the help of currency interventions and for raising the key rate.

At the same time, according to the results of 2015, the experts of the Euromoney magazine called Nabiullina the best chairperson of the Central Bank in the world. In 2016, Wall Street Journal praised her work and called her "the woman who revived the Russia’s markets." The same year she was named the best head of central banks, according to the rating of The Banker journal.

In late March, when nominating Elvira Nabiullina for the next tenure as the Chief of Russia’s Central Bank, President Vladimir Putin said that she had become the Central Bank governor in challenging time for the global and for Russian economies.

"The Bank has become an increasingly more important regulator during that period," the President said. Health of the Russian economy in general depends significantly on Central Bank activities, Putin added.

"Opinions always differ in respect of what the Central Bank is doing and in what way. At the same time, it is absolutely obvious that the Central Bank did a lot under your stewardship for stabilization of the economic situation at large, for stable development of the banking sector and the whole financial sphere," the president said.

ITAR-TASS

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