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Optimal regulatory design for the Central Bank of Russia

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  • Claeys, Sophie

    ()
    (BOFIT)

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.

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Bibliographic Info

Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 7/2005.

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Length: 41 pages
Date of creation: 08 Jul 2005
Date of revision:
Handle: RePEc:hhs:bofitp:2005_007

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Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
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Keywords: Central Bank; Prudential Regulation and Supervision; Monetary Policy Rules; Russia;

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