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Sergei Mironov: Russian Central Bank backstabs own country

09:09 | 17.12.2014 | Economy

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Moscow, 17 December 2014. PenzaNews. Sergei Mironov, representative of “A Just Russia” party faction in the Russian Duma, thinks the current policies of the Central Bank severely undermine the country and its citizens.

Sergei Mironov: Russian Central Bank backstabs own country

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“Frankly, my point of view is that we’re falling into the abyss, and the bottom’s yet far below. I think the Central Bank backstabs its own country, its own people by ‘washing its hands,’ thus displaying completely unprofessional behavior,” the member of the Russian Parliament said during a meeting with regional media on Tuesday, December 16, that included representatives of PenzaNews agency.

Sergei Mironov mentioned he sees no brilliant solution in the Central Bank’s decision to raise key interest rate from 10.5% to 17%.

“Indeed, in the morning we saw – that’s all, ruble rose, dollar dropped below 60 [rubles]. And ninety minutes later leapt even further. I’ll explain you why. If a profiteering trader receives 10% a day right now, this 17% key interest is incredibly good: he will plow these credits like fallen leaves. What the Central Bank is doing right now is against any basics, completely unprofessional, and, in my opinion, they must be held responsible for that,” said the leader of “A Just Russia.”

According to him, Kseniya Yudaeva, first deputy chairman of the Central Bank of Russia, is the person behind the current Russian financial policy and the changes in ruble exchange rate, and she must be laid off.

“She is a theorist: wrote a doctoral [dissertation] in America. […] Yes, she is an economist, a financial expert, but no banker,” Sergei Mironov pointed out.

Along with that, he listed three steps that may repair the economy.

“First: lay off madame Yudaeva, not [head of the Central Bank] Nabiullina, at once. Replace her with a professional banker who understands the sensitive matters in question. Second: the 124th bylaw of the Central Bank, amendable by the Central Bank itself. It requires each bank to maintain 20% of its capital in foreign currency. Let’s make it 10%, let’s make it 0%. What does a bank do [in this case]? It has to immediately dispose of this foreign currency – dollars, euros – in the market. What will happen? Supply and demand equalize. And the third step: we already introduced a draft law that also attracted ire: oh, the names they are calling us — obligatory exchange of 50% of foreign currency profits. Sold oil, gas, sold wood, sold cars, anything at all, acquired currency – sell 50% in the stock market. That’s it. What we get? Again, supply and demand equalize,” explained the Russian Duma deputy.

According to him, ruble is currently severely undervalued, while dollar must exchange at a rate of 36-38 rubles.

Sergei Mironov also suggested that “the point of no return” has not yet been reached, but economy may approach it as soon as in early January if the Central Bank maintains its policy.

“Students’ books say: to minimize inflation growth and stabilize the ruble exchange rate, usually you should raise key interest rate. Usually, but not in Russian realities. It doesn’t work here. That’s why I fully believe that if they do nothing until the New Year, these 11-day holidays […] will be that ‘point of no return’ because ruble will plummet down completely,” clarified the leader of “A Just Russia.”

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