The Bank of Russia should devote more time to explaining its policy

The discussants discussed the principal challenges to the monetary policy of the Bank of Russia in times of crisis, among which the following can be specified:

• the importance of maintaining a sustainable banking system amid the drastic depreciation of the national currency's exchange rate and a recession;

• difficulty in providing further increase in the money supply amid highly depleted collateral base against which banks may obtain refinancing from the Central Bank of Russia;

• high volatility of the ruble's exchange rate relating to both the fall in energy prices and geopolitical conflicts;

• the need to maintain inflation under control.

Bank of Russia's FX policy was in the spotlight of the discussion. Furthermore, all of the discussants agreed on that in December 2014 Russia's foreign exchange market was in panic that required decisive remedial policies to be undertaken. Additionally, most experts expressed their opinion that the current ruble exchange rate is fundamentally substantiated given the current crude oil prices, however the exchange rate may keep depreciating if external conditions worsen.

It was noted that the Bank of Russia should pay more attention to explaining its policy, which also includes active communication between representatives of the Central Bank of Russia and economic agents.

Pavel Trunin, Ph.D. in Economics, Director of Center for Macroeconomics and Finance of Gaidar Institute