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Source: Central Bank of the Russian Federation in English

29 September 2020

The third issue (2020) of the ‘Russian Journal of Money and Finance’ published

It is useful to have monthly or quarterly data on the growth rates of gross regional product (GRP) in order to estimate the dynamics of economic activity in the regions. However, Rosstat only publishes annual GRP values. Vladimir Boyko and his colleagues (Bank of Russia) suggest a method for obtaining monthly and quarterly data based on official Rosstat statistics, which are published with varying frequency. The authors conclude that their method provides more accurate estimates compared to the Rosstat methodology, according to which monthly or quarterly GRP estimates are subject to a large number of conditions and indirect calculations.
Irina Semina (Lomonosov Moscow State University) tests the efficiency of the risk-taking channel of monetary policy in the Russian economy and shows that a sharp decline of the key rate may cause financial instability as banks reallocate their funds to riskier higher-yield assets. The results of the research prove that it is necessary to take into account the impact of key rate decline on the stability of the banking sector to avoid excessive risk tolerance.
Economists are very familiar with the Mundell-Fleming trilemma, a hypothesis stating that central banks can only choose two options out of three: a fixed exchange rate, free capital flows, and independent monetary policy. But the trilemma has recently turned into a dilemma: both free capital flows and floating exchange rate do not warrant monetary policy autonomy in emerging markets, since monetary loosening in systemically important economies, e.g. the US and the euro area, triggers massive capital inflows to emerging markets. However, macroprudential policies can reduce that effect. That said, there is much heterogeneity in the strength of effect across different prudential instruments. These are the main conclusions of the initiative that studies the interactions of monetary and macroprudential policies by the International Banking Research Network, a collaboration of researchers from central banks. Konstantin Styrin and Yulia Ushakova provide a summary of the above initiative.
In her paper, Elizaveta Kamaraeva (International College of Economics and Finance, National Research University Higher School of Economics) concludes that the complexity of a banking group leads to higher risks by increasing riskier higher-yield assets and shrinking the so-called distance to default. In particular, it is shown that an increase in a banking group’s number of affiliates and its business diversification enhances its riskiness.


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