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Optimal regulatory design for the Central Bank of Russia

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  • Claeys, Sophie

Abstract

The Central Bank of Russia (CBR) assumes a wide range of functions not raditional to a central bank.In addition to the daily conduct of monetary policy, it acts as a regulator and supervisor of the banking sector.It is currently overssing the implementation of a deposit insurance scheme and is the main owner of Russia's largest commercial bank, Sberbank.As this additional functions may conflict with the CBR policy objectives, I review how the current design of the CBR deviates from the optimal allocation of regulatory powers within a central bank prescribed in the literature.I then empirically investigate the need for a supervisory body within the CBR.Using a simple Taylor rule framework I find that the CBR does not use its "hands-on" supervisory information to maintain financial stability, but rather to accomodate state-owned banks' balances.

Suggested Citation

  • Claeys, Sophie, 2005. "Optimal regulatory design for the Central Bank of Russia," BOFIT Discussion Papers 7/2005, Bank of Finland Institute for Emerging Economies (BOFIT).
    • Handle: RePEc:zbw:bofitp:bdp2005_007
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    More about this item

    Keywords

    Central Bank; Prudential Regulation and Supervision; Monetary Policy Rules; Russia;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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