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The policy of the Central Bank of Russia during the volatility of external markets

Vol. 25, Iss. 4, APRIL 2019

Received: 7 February 2019

Received in revised form: 21 February 2019

Accepted: 11 March 2019

Available online: 26 April 2019


JEL Classification: E52, E58, F32

Pages: 840–856

Tiunova M.G. Lomonosov Moscow State University (MSU), Moscow, Russian Federation

Subject The research examines key causes of volatility in global markets in 2018, analyzes their impact on the financial system of Russia and evaluates what financial authorities of Russia can do to cushion shocks from the external sectors.
Objectives The research determines key measures the Central Bank of Russia should undertake to eliminate threats to the stability of the Russian financial system. The distinctions of the Russian financial market are viewed in the context of other emerging economies.
Methods The theoretical underpinning comprises methods of synthesis, retrospective analysis, graphic analysis, comparison and matching. I also rely upon extensive illustrative materials and the latest statistical data on key indicators of the Russian and international financial statistics up to the end of 2018.
Results In 2018, the global financial markets had a threat of increasing borrowing costs for developed economies and escalating trade disputes among countries. The circumstances made global investors reluctant to undertake risks, causing the capital outflow from emerging markets. Trends in key indicators of the Russian financial market met the overall EME trends. Despite high volatility in 2018, relative sustainability of the Russian financial system resulted from good fundamental indicators and monetary and macroprudential policy of the Central Bank of Russia.
Conclusions and Relevance As the Central Bank of Russia tends to the countercyclical economic policy, this allows to alleviate the impact of the global oil market on the dynamics of the national currency and curb the volatility. If risk-exposed segments of lending are regulated, systemic financial risks will not be concentrated, thus helping curb the inflation processes.

Keywords: monetary policy normalization, protectionism, risks, capital outflow, emerging economy


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