For the second time in less than a decade, Elvira Nabiulina is leading Russia’s economy with treacherous water.
In 2014, after a year as head of the Central Bank of Russia, Ms. Nabiullina faced a sharp fall in the ruble and rising inflation, forcing the company into the modern era of economic policy classification. The politically dangerous move slowed the economy, curbed rising prices and earned an international reputation as a tough decision maker.
In the world of central bankers, among the technocrats who keep prices in check and keep financial systems stable, Ms Nabiullina has become a rising star in using traditional policies to manage the unbridled economy often linked to oil prices. In 2015, he was named Governor of the Year by Euromoney Magazine. Three years later, Christine Lagarde, then head of the International Monetary Fund, said Ms Nabiullina could “make the central bank sing.”
It is now up to Ms. Nabiulina to lead Russia’s economy through a deep recession and keep its financial system intact, cut off from the rest of the world. President Vladimir V. The challenge follows Putin’s years of spending to strengthen Russia’s financial defenses against powerful sanctions used in response to his geopolitical aggression.
She led the extraordinary resurgence Currency of Russia, Within 24 days of the February 24 invasion of Ukraine lost a quarter of its value. The central bank took drastic measures to prevent large sums of money from leaving the country, to control panic in the markets and to stop the potential flow in the banking system.
In late April, the Russian parliament convened.
“He is an important beacon of stability for Russia’s financial system” Elena Ripakova, deputy chief economist at the Institute of International Finance, a business group based in Washington. “His reappointment has index value.”
Recommending a difficult solution
In her last crisis, she turned a catastrophe into an opportunity. In 2014, Russia was rocked by double economic shocks: the fall in oil prices – the increase in US production and Saudi Arabia’s refusal to reduce production, and Russia’s reduction in oil revenues – and sanctions imposed after Russia annexed Crimea.
The ruble fell. Ms Nabiullina abandoned traditional policies – spending large sums of foreign exchange reserves to support the exchange rate – and turned the bank’s attention to managing inflation. He raised interest rates to 17 percent, which were relatively high for many years.
It was a painful restructuring, and the economy shrank for a year and a half. But in mid-2017, he overcame something that appeared far off a few years ago: the inflation rate fell below 4 percent, the lowest in the post-Soviet period in the country.
“He was a model of a modern central banker,” Richard Ports, a professor of economics at the London Business School, said he shared group positions with Ms Nabiullina at conferences.
“She was doing what she was supposed to do,” he said, even though it was politically difficult. “If you want to prove the alternative, you only have to look at Turkey,” he said. Ports added, where political interventions at the central bank over the years have allowed inflation to come under control. 70 percent this month.
Under the guidance of Mrs. Nabiulina, the Central Bank continued its modernization efforts. Improved its communication through planning key policy decisions, policy guidance, meeting with analysts and submitting interviews with reporters. The Central Bank of Russia is considered to be the main economic brain of the country and has attracted valuable economists from the private sector.
At its annual conference in St. Petersburg, the central bank attracted economists from around the world, and Ms Nabiullina attended international conferences, including the Federal Reserve’s annual symposium and regular meetings for Jackson Hole and central bankers in Wyoming. Apartments in Basel, Switzerland.
He is described as a man of personality, focus, always well-prepared, an advocate of market forces (despite his Soviet-era economic education) and a fan of history and opera. Born in Ufa, 700 miles east of Moscow, known for its heavy industry, he attended Moscow State University, one of the most prestigious schools in the country, and married a fellow economist.
Cleaning the banks
In addition to her record on monetary policy, Ms. Nabiulina received praise for her complete cleansing of the banking sector. During his first five years at the bank, he revoked about 400 bank licenses – essentially closing a third of Russia’s banks – in an attempt to remove vulnerable companies he described as “suspicious transactions”.
It was seen as a brave crusade: in 2006, a central bank official launched an intense campaign to shut down banks suspected of embezzling money. Was assassinated.
“Fighting corruption in the banking sector is the job of the most courageous people,” said Sergei Kurive, a Russian economist who left the country in 2013 and is now a professor at the Science Bow in Paris. He called his plan flawed because it was mostly limited to private banks. This created a moral risk issue, he said, adding that state-owned banks would be comfortable taking a lot of risk with government protection.
The integrity of Mrs. Nabiulina was never questioned, Mr. Currie said she had known him for 15 years. “He is not suspected of any corruption.”
Building a fort
Mrs. Nabiulina was a high-ranking official in Mr. Putin’s regime for two decades. He has been his chief economic adviser for more than a year since becoming chairman of the central bank in June 2013. He had already served as Minister of Economic Development when Putin was Prime Minister.
Sofia Donets, an economist at Renaissance Capital in Moscow, who worked for the central bank from 2007 to 2019, said, “She is well-trusted by the government and the president. The finance sector has been handed over to the central bank.”
This hope was built when Ms Nabiulina weakened Russia’s economy against Western sanctions, especially in the long run of US sanctions. In 2014, the United States cut off many large Russian companies from its capital markets. But these companies had large amounts of foreign currency debt.
Ms. Nabiullina began squeezing as many US dollars as possible out of the economy so that the risk of injury to companies and banks would be lower if Washington restricted its use of the dollar.
He converted the bank’s reserves of more than $ 600 billion into gold, the euro and the Chinese renminbi. During her tenure, the share of dollars in reserves fell to about 11 percent and more than 40 percent, Ms Nabiullina told parliament last month. He told lawmakers that the country still has “enough” reserves of gold and renminbi, even after sanctions have frozen the bank’s foreign reserves.
Other protections against sanctions are an alternative to the SWIFT, a global banking news organization developed in recent years. The bank also changed the payment infrastructure to enable credit card transactions in the country, so even the exit of Visa and MasterCard will have less effect.
In March, Bloomberg News And The Wall Street Journal, Citing unidentified sources, said that Ms. Nabiulina had tried to resign after the invasion of Ukraine. Those statements were rejected by the central bank.
Last month, the Government of Canada He was banned for being a “close ally of the Russian regime.”
Mr. who had not recently been in contact with Mrs. Nabiullina. Currie said he thought he could stay in his role because if he resigned he would be able to convince himself that inflation would be out of control and that ordinary Russians would suffer more. Strictly.
“However, I think he’s really putting a stop to Putin’s war economy,” he added. “She’s actually doing something she did not record.”
A war economy
Ms. After Nabiullina had built up a reputation for suppressing inflation and bringing traditional monetary policy to Russia nearly a decade later, Western financial fines imposed after the invasion of Ukraine forced him to quickly abandon the policies he wanted. She doubled her interest rate to 20 percent; Used capital restrictions to strictly control the flow of money out of the country; Suspension of stock trading on the Moscow Exchange; And restrictions on banks were relaxed so that credit could not be granted.
These measures put an end to the initial panic and helped the ruble to recover, but capital restrictions were only partially removed.
Now Russia is entering a steep recession with a closed economy. On April 29, the bank cut The interest rate is 14 percentAs inflation rises and companies are forced to rediscover their supply chain without imported goods, this is becoming a sign that they are trying to mitigate the long-term impact of sanctions on families and businesses from mitigating the financial storm.
Inflation has risen sharply, and the central bank predicts that the rate will reach 23 percent this year. It said the overall economy could shrink by as much as 10 percent.
“We are in a zone of great uncertainty,” Ms Nabiullina said.
Liz Alderman Contributed report.
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