Bloomberg: the main banker who saved the Russian economy from falling into the abyss

“We need intervention!” - repeated in a panic one of the Central Bank officials.

Bank chairperson Elvira Nabiullina watched on the tablet screen how the ruble responds to the emergency interest rate increase undertaken by the regulator. “No,” she said. - Not now - Russia will no longer deal with market fluctuations of the ruble. Let it be a cold water for speculators. ”

This bold decision, announced by two people dedicated to the details of the meeting at the Central Bank, began to bear fruit - both Nabiullina and her patron President Vladimir Putin. Despite the fact that the purpose of the sanctions was to punish Russia for its invasion of Ukraine a year ago, the ruble stabilized. From that “black Tuesday”, when the ruble fell to a record low, it strengthened against the dollar by 19%, showing the best result among the developing countries ’24 currencies.

Russia is still struggling with the hardest recession caused by the sharp fall in oil prices, and many Russian banks are in financial difficulties. But now the economy has at least receded from the brink. Finance Minister Anton Siluanov said last week that the worst was over.

And in the Central Bank itself - next to the Red Square - they are now enjoying a temporary lull. Nabiullina will no longer have to waste currency reserves in a vain attempt to support the ruble. Now it faces a no less ambitious and difficult task - to restore the shaky economy.

Straight line

Although the Central Bank is formally independent, analysts agree that Putin makes the final decisions. And yet, Nabiullina rightfully gained credibility and received a direct telephone connection with the president.

Nabiullina is not afraid to express her opinion. According to knowledgeable people, last year, when advisers insistently recommended Putin to impose capital controls, she spoke out against such a measure and insisted on letting the ruble float free. Putin listened to her advice and then gave her the opportunity to understand the details herself.

“It was a historic moment because it convinced Putin to make a market decision on a problem that threatened the entire banking system,” said Rair Simonyan, chairman of the board of directors of UBS AG in Russia. According to him, Russia could well be in economic isolation.

Nabiullina’s offer turned out to be one of the biggest financial risks in all 15 years of Putin’s tenure. At first, she sharply raised the initial interest rate to an unreasonably high level - from 10,5% to 17%. And then refused to intervene in the foreign exchange market.

Strategy discussion

Putin regularly calls the Central Bank on a hotline to discuss strategy issues with Nabiullina, the economic minister in the past and presidential adviser, who in the year 2013 took over as president of the Central Bank. It is said that when a straight line call is heard on her desk, everyone present leaves the office.

“He cannot interfere in the day-to-day activities of the Central Bank,” says Putin’s press secretary, Dmitry Peskov. “He has no such right.”

Against the background of the stabilization of oil prices from January and uncertainty about the likelihood of tougher sanctions, Nabiullina can concentrate on solving the problems associated with the first recession in six years. Enlisting Putin’s support, she surprised analysts by lowering the key rate to 15% at the end of January, and this month the rate was lowered to 14%.

“The peak of negativity has been passed,” Finance Minister Anton Siluanov told 19 in March.

"Big problems"

The former head of Nabiullina and the former head of the Ministry of Economic Development and German Gref do not agree with this assessment. Gref, who now heads Sberbank OJSC, said that credit organizations had to create “huge” reserves and predicted an increase in non-repayable loans.

“All banks have great difficulties, including us,” Gref told reporters in Moscow on March 20. The economic situation is also not encouraging: consumer demand in Russia may shrink to its maximum over the past six years, while inflation has accelerated to a record level in 2002% from 16,7. Given the current situation, the Central Bank predicts a decline in the economy this year by 4%.

Nabiullina, in turn, adopted from the Putin the manner of bureaucratic survival. After the president openly criticized the Central Bank for sluggishness last year, she appointed Ksenia Yudayeva, who was in charge of monetary policy, tempted in these matters by former Central Bank deputy chairman Dmitry Tulin, to replace him. This decision was accepted with approval by many economists, while Nabiullina was able to leave her reliable ally Yudaeva in the bank, instructing her to deal with the issues of forecasting, strategy and financial stability.

“Panic in the market”

However, not everyone appreciates the work of the Central Bank. According to Pavel Trunin, who heads the department of monetary policy at the Gaidar Institute in Moscow, most of Nabiullin's 2014 year only reacted to the situation in the markets instead of preempting it. And although the decision to let the ruble float to free float mitigated the impact of oil price shocks on the economy, this step was made too late to prevent “market panic,” he said.

At the same time, according to a Bloomberg survey of 29 economists, assessments of how Nabiullina is coping with the crisis are improving. 31% of respondents said that their opinion about the work of the regulator has improved compared to what was six months ago. 21% of survey participants noted a deterioration in their ratings. In the framework of the same survey, 19 people gave the Central Bank a positive assessment, 8 - neutral and 2 - negative.

In the Russian economy, there are positive trends in other indicators. On Thursday, the Central Bank announced that in one week, from 14 to 20 in March, Russia's international reserves increased from 1,2 billion to 352,9 billion, which was the maximum weekly increase since mid-July last year.

Social Networks

And yet, few in the banking system had to deal with geopolitical issues like Nabiullina — the first woman to lead a group of eight banks. For example, when Putin decided to annex the Crimea, she began to monitor social networks in order to evaluate investors' forecasts regarding the ruble.

Neither Nabiullina nor Putin were ready for the collapse of oil prices, which turned the economy. However, despite all this, the president gives her support.

“You can, of course, scold Nabiullin, but we must not forget that, in general, the policy of the Central Bank is adequate,” Putin said after raising rates in December. “The central bank is not the only one responsible for the economic situation in the country.”