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Russia's central bank chief: Incompetent or just misunderstood?
Elvira Nabiullina is a riddle, wrapped in a frozen asset, inside of a western bank. But at least Putin likes her?
Year after year, Elvira Nabiullina patiently stacked gold bars and delicious foreign currency so that one day the Bank of Russia could do something really cool, like buy everyone an iPhone. Something like that. We’ll never know what the actual plan was because approximately half of the central bank’s foreign exchange reserves ($300 billion) were vacuumed up by Washington and its underlings as punishment for the Not-War in Ukraine.
How could this happen? And does this mean Nabiullina is a member of the dreaded 9th Column? And why did Putin nominate her for another term? So many questions.
If the State Duma signs off on her reappointment, Nabiullina will remain head of the Bank of Russia until 2027.
While Nabiullina is expected to stay at her post, one of her deputies was recently thrown under the bus (allegedly for uncouth comments about destitute pensioners that he made months ago). At the same time, the head of the central bank was excluded from a newly formed commission charged with shielding Russia from western sanctions.
What does this mean, exactly?
We’ll probably never know. But by surveying hot takes from across Russian media, we can formulate an educated guess that might roughly correspond to reality. Maybe.
HOT TAKE #1: MOSCOW DIDN’T ANTICIPATE WASHINGTON’S THIEVERY, LEAVE NABIULLINA ALONE!
According to Sergey Lavrov, the Russian government did not think Washington would freeze Russia’s assets:
“When they froze the central bank reserves, nobody who was predicting what sanctions the west would pass could have pictured that. It’s just thievery,” said Mr. Lavrov during a speech to students and teachers of MGIMO.
Some have postulated this is a bluff and the Kremlin intentionally used these reserves as bait to undermine Dollar Hegemony—sure, anything is possible. But it’s important to note that according to some experts, the decision to freeze these assets really was unthinkable:
“It is unlikely that anyone could have foreseen such a scenario,” says financial expert Svetlana Samoilova. “There is a universal banking rule: if the state forms reserves in the currencies of other countries, they are stored where this currency operates. That is, the euro must be physically located in Europe, dollars in the United States, yuan in China. It would be the same if the FRS or the ECB replenished their reserves with rubles—then these funds would be kept in accounts in Russia.”
In general, the experts interviewed by MK are in no hurry to accuse the Central Bank and the Ministry of Finance of short-sightedness: they pursued their policy regarding the country’s financial reserves in accordance with the economic logic accepted in the world.
HOT TAKE #2: WE NEED MARKET STABILITY & A DIGITAL RUBLE
Even if Putin secretly loathes Nabiullina and wants to exile her to Siberia (unlikely, as they go way back; she was even in charge of economic policy for his 2004 presidential race), it would be bad for The Market if she got the boot. Besides, her digital ruble is excellent:
The merit of Elvira Nabiullina is also that today the Russian financial market is one of the most technologically advanced in the world. And those ideas for launching a digital ruble that the Bank of Russia is implementing are an expression of one of the main global trends in the development of the financial system, economist Nikita Maslennikov emphasized.
“There is an expression of the president's confidence in the head of the Central Bank,” continues Artem Tuzov, executive director of the capital market department at IC Univer Capital. “In the context of tough sanctions, the Bank of Russia did not allow the collapse of the Russian financial system.” Shaking up the management of the Central Bank in an environment where employees need to work in an enhanced mode would have a negative impact on key decisions in the financial market. The President's decision to reappoint Nabiullina for the market means stability and understanding that the steps previously taken by the regulator will not be unexpectedly canceled, the expert noted.
HOT TAKE #3: SHE’S A GROSS LIBERAL BUT WE CAN’T GET RID OF HER
Nabiullina is parasite but we’re stuck with her—at least for now. So says Tsargrad:
Many expected the resignation of systemic liberals, but this did not happen. Most likely, the authorities are guided by the principle of “they don’t change horses in midstream” and seek to show the West that no split in the elites has occurred, even despite the most severe sanctions pressure. However, the Russian economy is not any easier. The bastion of systemic liberalism remained intact. […]
The last years of Nabiullina's reign were marked by a number of failures, the most striking of which was the loss of $300 billion in gold and foreign exchange reserves, which the Central Bank carefully put into its moneybox, slowly spending this money on economic development. As a result, we have neither rapid GDP growth, nor a significant part of the reserves.
The Central Bank also cannot cope with inflation. Already now, in annual terms, it has exceeded 10%. And even before the imposition of sanctions, at the end of 2021, the price increase was as much as 8.39%. Of course, we can say that this indicator was influenced by the global situation, because prices in foreign markets grew at a record pace for many decades.
HOT TAKE #4: GET RID OF HER BEFORE IT’S TOO LATE
Nabiullina is a person whom I remember from 1997, whose dismissal from the post of First Deputy Minister of Economic Development was for everyday idiocy. I had a hand in this and I'm still proud of it. A number of economic disasters are associated with it. In 2014, we had a devaluation of the ruble, a fall in the stock market and a panic flight of capital from the country. It started in January with oil at $105 a barrel and love for the West. Therefore, Nabiullina, first herself, and then through the mouth of her deputy, convincingly explained that the Bank of Russia refuses to fulfill its constitutional obligations to ensure the stability of the national currency.
Next, she organized a bank bailout. As a result, regional banks that financed the real sector were practically exterminated. Norms were introduced according to which it is impossible to finance the regional sector without serious protection. Now Nabiullina has provided a gift to our enemies, keeping from 315 to 400 billion dollars so that we have lost this money. In 2013, the appointment of Nabiullina was synonymous with a financial and economic catastrophe, and this is a synonym for a moral and political catastrophe. To get the support of the president, you must destroy the country. Nabiullina is a symbol of money starvation from the country. She is a symbol of a policy that blocks development, that deprives Russia of all prospects. She is only rewarded for this,” Delyagin emphasized.
OTHER HOT TAKES: SHE’LL BE GONE IN A FEW MONTHS, THE GLOBAL FINANCIAL SYSTEM NEEDS TO BE TOTALLY REVAMPED
As one commentator told Regnum, replacing Nabiullina wouldn’t accomplish much without radical changes to the global financial system:
“The replacement of Nabiullina should mark a change in the financial and economic development paradigm not only of the country, but of the whole world. Russia will not be able to do this alone, at least it needs to be done together with China and other growing economies of the East. But China is now under the most powerful pressure from the United States. Apparently, the Chinese are not yet ready to take radical steps to change the financial and economic world order.”
Others predicted Nabiullina would be gone in a few months. Nakanune interviewed a guy who said a criminal investigation should be launched to figure out why she allowed gold to pour out of Russia. Sure, why not?
For a hot western take, Bloomberg’s scoop-filled write-up (which alleges Putin refused Nabiullina’s resignation—a claim that has been echoed by Russian media but has yet to be confirmed) is worth reading. Bloomberg loves this lady (“European Central Bank chief Christine Lagarde, a fellow opera-lover then in charge of the International Monetary Fund, in 2018 likened her qualities to those of a great conductor”).
Your humble Moscow correspondent doesn’t like the idea of centrally controlled programmable money, and therefore has no need for central banks.
Soon we will convert all our rubles into potatoes and head for the mountains.