Russia Has the Central Banker of the Year

[pmaitra]

Russia Has the Central Banker of the Year
Euromoney, a leading business and finance magazine, figures Russia’s Elvira Nabiullina is the top central banker in the world

Kenneth Rapoza | (Forbes) | Russia Insider

Elvira Nabiullina (Эльвира Сахипзадовна Набиуллина, Эльвира Сәхипзада ҡыҙы Нәбиуллина)

Originally appeared in Forbes

And in the category of central bank leadership, this year’s number one bank governor is…

Pause for effect.

Elvira Nabiullina of the Central Bank of Russia. Euromoney awarded Nabiullina with the top central banker award on Wednesday. She will be featured in an interview with the magazine in their October issue. Last year, India’s Raghuram Rajan of the Reserve Bank of India was voted the world’s leading central banker.

Nabiullina oversaw massive turbulence in the Rouble market last year when the government moved away from its fixed-trading band to a free-float system. The Russian Rouble was crippled by a combination of economic sanctions, bad geopolitical news involving the east Ukraine-Russia battle field, and declining oil prices. It went from the mid-30s to 70 following back to back rate hikes by Nabiullina. The market saw the hikes as a Russian central bank panic attack and shorted the Rouble. Many technocrats in Russia questioned whether she was wise to let the market dictate the direction of the Rouble given the political crisis there, but she let the market have its way and short-sellers took it on the chin. Within a month, the Rouble was heading back into the 60s. Nabiullina has managed the crisis well, Euromoney said.

Nabiullina made it harder for currency speculators to crush the Rouble.

She expanded the banks currency liquidity facilities, adding new maturities and broadening the definition of eligible collateral in its foreign exchange auctions, while committing to recapitalize viable lenders.

“This shock therapy worked,” Euromoney editors wrote in a press release. “Bringing forward plans to abandon Russia’s failing band with the dollar allowed the Central Bank of Russia to intervene on an ad-hoc basis to stabilize financial conditions, but avoided wasteful interventions. It left the market to guess the size and frequency of interventions, thereby hiking the cost of forex speculation.”

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Interview with Bloomberg: Salient points of the interview:

1. Russia shall not spur economic growth by printing more money. Others’ experiences show that pumping more money into the system leads to the exact opposite.
2. Russia shall not fix the exchange rate.
3. Russia shall not impose administrative restrictions on capital flows.

Apart from this, she explains why Russia has started to increase its gold reserves, that the Russian Central Bank is independent, and that she checks oil prices several times a day.


Commentary: As a multitude of articles popped up from the West about the weakening of the Rouble vis-à-vis the US Dollar, Nabiullina must have been under immense pressure to expend Russia’s massive but finite foreign exchange reserves to shore up the Rouble. However, she stuck to the fundamentals, and let water find its own level. She came out the winner. Dire predictions from the West have so far turned out to be over-inflated. Such alarmist articles, nonetheless, continue to pour out. Many articles were also posted here at DFI endorsing Russia’s refusal to shore up the sliding Rouble, countering these alarmist articles. This award is a recognition that what the majority of the mainstream media says is neither necessarily true commentary, nor necessarily expert commentary.

Some pictures:

May be merged later with: http://defenceforumindia.com/forum/threads/economy-of-the-russian-federation.65289/

 

[sob]

So it is proved that all it requires is an incompetent government for the Central Bank Governor to shine.

 

[pmaitra]

Weaponized Default: Russia’s Ultimate Answer to Western Aggression?
A Russian default on its $700 billion in foreign debt would send shockwaves through the Western financial system

Pepe Escobar | (RT) | Russia Insider


700 billion dollars of potential firepower

This article originally appeared at RT

Let’s start with some classic Russian politics. Finance Minister Anton Siluanov is drawing up Russia's economic strategy for 2016, including the government budget. Siluanov – essentially a liberal, in favor of foreign investment - will present his proposals to the Kremlin by the end of this month.

So far, nothing spectacular. But then, a few days ago, Kommersant leaked that Russia's Security Council asked presidential aide Sergei Glazyev to come up with a separate economic strategy, to be presented to the council this week. This is not exactly a novelty, as the Russian Security Council in the past has asked small strategy groups for their economic assessment.

The Security Council is led by Nikolai Patrushev, the former head of the Federal Security Service. He and Siluanov are not exactly on the same wavelength. And here’s where the plot thickens. Glazyev, a brilliant economist, is a Russian nationalist – sanctioned personally by the US.

Glazyev is arguably going no holds barred. He is in favor of barring Russian companies from using foreign currency (which makes sense); taxing the conversion of rubles to foreign currencies (same); banning foreign loans to Russian firms (depending if they are not in US dollars or euro); and – the smoking gun - requiring Russian companies that have Western loans to default.

Predictably, some sectors of US ‘Think Tankland’ went bonkers, stating with utmost certainty that “the Russian energy sector would not be able to find much financing without connections to the West.” Nonsense. Russian firms would easily find financing from Chinese, Japanese or South Korean sources.

Whatever measure of attention Glazyev will get inside the Kremlin, the whole episode already means that Moscow harbors no illusions in the near future regarding the exceptionalists (one just has to look at the presidential candidates, from ‘El Trumpissimo’ to ‘The Hillarator’); as Russian Deputy Foreign Minister Sergei Ryabkov recently put it, ”[we] should expect toughening of the sanctions pressure.”
Once thing though is absolutely certain; Moscow won’t bend over backwards to “pacify” Washington.

Neo-Tsarism, anyone?

One might be tempted to see Glazyev drawing up plans to return to some sort of Tsarist self-sufficiency while cutting off ties with the West. Assuming some version of that would be approved by the Kremlin, what’s certain is that it may turn into a huge blow the EU might not recover from.

Imagine Russia defaulting on all its foreign debt - over $700 billion – on which Western sanctions have raised extra, punitive costs in terms of repayment.

The default would be payback for the twin Western manipulation of oil prices and the ruble. The manipulation involved unleashing on the oil market over five million barrels a day of excess reserve production that were held back by a few usual suspects, plus derivative manipulation at the NYMEX, crashing the price.

Then, the derivative manipulation of the ruble crashed the currency. Almost all imports to Russia were virtually blocked – as oil and natural gas exports remained constant. In the long run though, this should create a significant balance of trade surplus for Russia; a very positive factor for long-term growth of Russia’s domestic industry.

Vladimir Yakunin, the former head of Russian Railways, now out due to a reshuffle, recently told AP in no uncertain terms how the aim of US sanctions was to cut off Russia economically from Europe.

Sanctions, coupled with speculation on oil and the ruble, pushed the Russian economy into recession in 2015. Yakunin, like most of the economic/business elite, expect Russia’s economic troubles to last at least until 2017.

Currently the only products that the West needs from Russia are oil and natural gas. A possible Russian default on its debt would have no effect on that demand in the short-term; and most probably in the long-term as well, unless it would contribute to a new financial crisis in the West, something that nearly happened in 1998.

We all remember August 1998, when a Russian default shook the entire Western financial system to the core. If a Russian default is now the object of serious consideration by the highest powers that be – and that includes, of course, the FSB, SVR, GRU - then the specter of The Mother of All Financial Crisis in the West is back. And for the EU, that would be fatal.

It’s your fault we can’t loot

Enter Iran. The lifting of sanctions on Iran – arguably by early 2016 – ultimately has nothing to do with the nuclear dossier. It’s a ‘Pipelineistan Great Game’, as in having everything to do with oil and natural gas.

The US – and EU – wet dream remains to replace Russia with Iran in terms of natural gas and oil imports to the EU. Every serious analyst knows this might take at least a decade, and over $200 billion in investment; not to mention Gazprom would fight it with the formidable – commercial – weapons in its arsenal.

At the same time Western financial powers in the New York-London axis did not anticipate that Moscow would not bow down and accept their demands that Putin lay off Ukraine - so that they could loot Ukraine’s mostly agricultural lands at will. They obviously didn’t learn from history; Putin also did not back off when he stopped them from looting Russia.

So the entire, sorrowful Kiev episode, as much as an infinite NATO expansion gambit, was also an attempt to stop Putin from preventing the Western looting of Ukraine.

What we had as a result was a tectonic geopolitical shift; the reconfiguration of the entire world balance of power as Russia and China deepened their strategic partnership - based on a mutual external threat coming mostly from the US, with the EU as accessories. Russian intelligence very well knows the alliance now makes Russia and China invulnerable, whereas separately they could easily fall victim to trademark Divide and Rule.

As for the counter-NATO angle, Russia has had plenty of time to remilitarize, focusing on defensive and offensive missiles; the key to the next major war, and not obsolete US aircraft carriers. Russian defensive missiles such as the state-of-the-art S-500 and the offensive Topol M - each with ten MIRVs - can easily neutralize whatever the Pentagon may have in store.

After Russia, Western financial ‘Masters of the Universe’ went after China for allying with Russia. The usual financial suspects rigged the Chinese stock market in an attempt to crash the economy, using Wall Street proxies manipulating cash settlement mechanisms to first raise up the prices of the Chinese A shares, creating a giant boom, and then reversing the cash settlement rig to crash the market.

No wonder Beijing, very much aware of what was happening massively intervened; is actively studying cash settlement moves; and is carefully reviewing the records of major stock operators in China.

Round up those central bank suspects

The Kremlin’s got to do something about the Russian Central Bank.

The Russian Central Bank kept interest rates high, forcing Russian oil and natural gas producers to finance their operations from Western sources, and thereby plunging the Russian economy into a debt trap.

These loans to Russia were part of the New York-London financier axis control mechanism. Were Moscow to “disobey” the West, the West would call in their loans after crashing the ruble, making repayment almost impossible, as they did with Iran.

This is the mechanism through which the West – and its institutions, the IMF, World Bank, BIS, the whole gang – rule. Beijing is moving either to complement or replace this set-up with new and more democratic international institutions.

If the Russian Central Bank had operated under sounder principles, it would have lent money at interest rates below the West’s, and linked each loan to productive investment. A modus operandi totally different from the US - where much of the central bank credit goes to banks and financiers for their speculative scams.

Michael Hudson, among others, has already made the case that the entire Fed only serves the interest of its financial rulers and does not give a damn about American industrial infrastructure, which was progressively shifted to colonies and/or vassals, as well as to China.

So the ‘Masters of the Universe’ thought hardcore pressure on both Russia and then China would work. It did not. There are reasons to be alarmed; the ‘Masters of the Universe’ will keep raising the ante, higher and higher.

The scenario ahead spells out Russia further moving east while simultaneously moving to extricate itself from most of the West’s institutional architecture.

The merger of the China-driven New Silk Roads, a.k.a. One Belt, One Road and the Russia-led Eurasian Economic Union, although slow and full of pitfalls, is irreversible. It’s in their mutual interest to invest and develop a pan-Eurasian emporium.

Iranian natural gas will go mostly to the Asian part of Eurasia, and not the EU. And the Chinese economy will at least triple over the next fifteen years as the US continues to de-industrialize.

Whatever Putin and Obama discuss at their possible meeting at the end of the month in New York, exceptionalist pressure over the bear won’t abate. So it pays for the bear to keep a lethal financial weapon in storage.

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Commentary: Some of the things suggested by some hawks, as reported in this article, run counter to those espoused by the Governor of the Central Bank of Russia, such as interest rates. Not everything is in contradiction and there are a few things where both sides think alike, such as, but not limited to, allowing conditions so that those that have debt in foreign currencies might have to default.

 

[jouni]

These RT articles are even more entertaining than your anti-muslim hysteria

 

[pmaitra]

These RT articles are even more entertaining than your anti-muslim hysteria

Elvira Nabiullina is a Tatar Muslim from Bashkortostan. I have posted an article praising Elvira Nabiullina. This probably proves my anti-Muslim hysteria, as you allege, right?

Her middle name is Sabihzadovna (Сахипзадовна), or Sahib-zada (Сәхипзада). In Hindi and Urdu, this would mean, someone "born out of a sahib."

Zada in Tatar, Bashkir, and several Russian languages, is jata in Hindi and Sanskrit, which is root cognate of the word jaati, which means caste.

 

[pmaitra]

Russia’s Recession Bottoms Out
Statistics point to the worst being over, with signs of recovery starting to grow

Alexander Mercouris | Russia Insider


Russian Economy - Powering Ahead?

Away from the gyrations of the financial markets, latest statistics appear to confirm that Russia's economy is coming off the bottom.

Both industrial output and investment contracted by less in August than in July – and less than forecast - whilst after a brief and small upward tick caused by the August ruble fall, the trend in inflation is down again.

It is not all good news. Retail trade turnover in August was down by 9.1% - worse than expected - whilst the fall in the ruble in August caused the Central Bank to delay its planned interest rate cut.

Nonetheless the basic story the statistics tell is of an economy that is now coming off the bottom.

Meanwhile in a time of recession the government’s budget deficit is just 3% of GDP

Perhaps the most remarkable figure of all is that aggregate foreign debt is expected to fall to $500 billion by 1st October 2015 – testament to the speed of the economy’s deleveraging.

That the Russian economy has paid off roughly a third of its foreign debt during a period of falling oil prices without sinking into depression is a sign of its underlying strength and resilience. With the Central Bank’s reserves now standing at $365 billion, the day when they will overtake the amount of foreign debt may not be so far off.

All this comes as the US Federal Reserve Board has once again put off a rise in interest rates, which remain essentially zero.

It is difficult in this situation to avoid making comparisons between the two economies.

Officially the rate of unemployment and the size of the budget deficit in the two economies is about the same. However the US is supposed to be several years into its recovery, whilst Russia is in recession.

Inflation is many times higher in Russia, but is expected to fall quickly. Russia has a trade surplus, whilst the US runs a trade deficit.

The biggest difference between the two economies is that Russia can increase its interest rates – as it did at the start of the year – to an extent that in the US now looks unimaginable. It is imposslbe to imagine interest rates of 17% in the US, such as we saw in Russia at the start of the year, without this triggering a severe economic crisis. Russia by contrast seems able to weather the storm.

That perhaps is as good an indication as any of which economy is in better shape.

 

[pmaitra]

Barclays Believes Russia’s Recession Is Ending
British investment bank believes Russia’s economy is close to bottoming out

Kenneth Rapoza | (Forbes) | Russia Insider



Originally appeared at Forbes

A new dawn for Moscow…again? Barclays thinks the recession pains are starting to ease up a bit. But, the investment bank warns, Russia’s economy is still struggling and won’t post any growth this year and maybe not until the end of next year.

Has Russia bottomed out?

If I told you what I knew, that would cost an annual fee of $20,000.

In the meantime, here is what Barclays Capital is thinking.

Russia’s real sector data for August was a bit better, implying positive momentum change in a country hit by sanctions and weak oil prices. It’s not that data is improving, per se. It’s just that the rate of decline is moderating.

In particular, real investment improved to a -6.8% yearly rate from the -8.5% yearly rate in July, which proved to be better than consensus. Investments are starting to benefit from the improvement in locally produced profits that has taken place in 2015. In addition, industrial production declined by -4.3% yearly in August from the -4.7% decline in July.

When it’s that bad, one hopes it can only go up.

Barclays might be a bit more bullish than they need to be. Consumption data released on Thursday was worse than expected. Real wages are down 9.8% compared to a 9.2% decline in July. This was worse than expectations in the market.

Retail sales are declining again, down 9.1% in August and only slightly better than the July decline. And unemployment was unchanged, meaning further adjustment in consumption could be under way this quarter.

For BarCap, today’s Russian data suggest that declines in real GDP continued into the third quarter, but that momentum is improving, albeit slowly.

For instance, second quarter GDP fell 2.0% on a quarterly basis, accelerating from the first quarter decline of 1.6%. Barclays is forecasting a decline in third quarter GDP to be better than previous quarters. In other words, the recession is still in place, “but is starting to show signs of bottoming out,” BarCap analysts said today.
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Commentary: A pro-Russia article from Forbes? There must be something significant I don’t know.

 

[pmaitra]

Russia’s SWIFT Equivalent Already in Use
Last year voices in the west were raising the prospect of banning Russia from the SWIFT cross-border payments system

(TASS - Russian news agency) | Russia Insider

KAZAN, September 18 (TASS) - A number of big Russian banks are already using the equivalent of SWIFT created by the Central Bank, the regulator’s Deputy Chairman Olga Skorobogatova said at Finnopolis 2015 conference on Friday.

“Some big banks are already signing bilateral agreements and using the system [alternative to SWIFT - TASS],” she said.

Earlier TASS reported with reference to Central Bank Chief Elvira Nabiullina that an equivalent of Belgian SWIFT has “practically” been created in Russia. “As far as financial messages transmission is concerned, we have practically set up a SWIFT equivalent in Russia,” Nabiullina said.

The system contemplates competitive tariffs and the regulator is ready to develop and improve this service, she added. Several dozen banks are ready to use it, Nabiullina said. Head of the Central Bank said that the SWIFT equivalent was developed with maximum use of Russian IT technologies. “Many complained our microelectronics is poorly developing and so on, but the demand is needed to develop domestic production. We are generating such a demand,” Nabiullina said.

It was reported earlier that Russia’s SWIFT equivalent would be launched in fall 2015.

Simultaneously with Russia, China is also launching with own system of banking transaction system. Earlier Russian Deputy Finance Minister Alexey Moiseyev said creation of an equivalent to SWIFT within BRICS could become the next step of creating behind-the-border systems of banking info exchange.

MOSCOW, September 17 (TASS) - An equivalent of Belgian SWIFT has practically been created in Russia, Central Bank Chief Elvira Nabiullina said on Thursday.

“Work is on track,” the Central Bank Chief said. “As far as financial messages transmission is concerned, we have practically set up a SWIFT counterpart in Russia,” Nabiullina said. The system contemplates competitive tariffs and the regulator is ready to develop and improve this service, she added.

Several dozen banks are ready to use it, Nabiullina said. The head of the Central Bank said that the SWIFT equivalent is being developed with maximum use of Russian IT technologies. “Many complained our microelectronics is poorly developing and so on, but demand is needed to develop domestic production. We are generating such demand,” Nabiullina said.

It was reported earlier that Russia’s SWIFT counterpart would be launched in fall 2015. The need for having a domestic SWIFT and a national payment system became more acute after sector sanctions were imposed against Russia last year.

The Society for Worldwide Interbank Financial Telecommunications (SWIFT) transmits 1.8 billion communications a year, remitting payment orders worth $6 trillion a day. The system comprises over 9,000 banks from 209 countries.

Under the SWIFT charter, groups of members and users are set up in each country covered by the system. In Russia, these groups are united in the RosSWIFT association.​

 

[pmaitra]

Rouble on the Rebound, Russia to Buy More Gold
Signs are the Rouble is appreciating and Russia will continue its position (aside China) as one of the world’s top gold buyers and producers

(German Economic News) | Russia Insider


Got gold?

This article originally appeared in German Economic News. Translated from the German by Paul Dunne

The Rouble has recovered so strongly in the last few months that the Russian Central Bank wants to undertake corrective measures. They are talking about buying gold and foreign exchange.

“We’ll see what happens in the market”, Reuters reports Central Bank chief Elvira Nabiullina as saying this weekend at the meeting of the World Bank and International Monetary Fund (IMF) in Lima. “If the fluctuations increase, we will evaluate the situation carefully and where possible replenish gold and foreign exchange reserves.” To date the reserves total about 370 billion dollars. Earlier statements indicate that Nabiullina is striving for a level of up to 500 billion dollars.

In the trading week just gone, the Russian Rouble increased in value against the US dollar as never before this year. This has encouraged speculation that the central bank could use the opportunity to buy foreign currency. It has had many times to intervene in the currency markets this year, selling foreign currency in order to shore up the sharply fallen Rouble.

Responding to Russian actions in Ukraine, the EU and the USA imposed economic sanctions against Russia and put difficulties in the way of Russian access to capital markets. The Rouble thereby came under heavy pressure to devalue, especially as the price for oil and gas on the world market sank. Both these raw materials are important Russian exports.