In particular, we highlight the remarks about the new economic paradigm for the economy, both in Russia and globally. Ulyukaev also discussed inflation targeting, the refinancing system and banking regulation, as well as the exchange rate setting.
The global economic model of previous years cannot be repeated. Ulyukaev believes that the financial industry will see fewer risks and more reserves. In the coming years, global monetary policy easing will be reversed and fiscal policy stimulus is unlikely, in his view. Growth in this environment will be low.
Orientation to local demand and financing sources is the new norm for Russia, he said.
Low inflation is required to activate local financial sources. It facilitates savings, and is expected that inflation targeting will be fully in place by 2015. A floating exchange rate and interest rate targeting are also part of the new monetary policy paradigm, Ulyukaev said. The FX band will gradually be dismissed which, for FX reserves, will mean stable dynamics as there are no interventions.
The refinancing system will be crucial in the switch to inflation targeting, with lending expected to continue growing robustly. The CBR has the opportunity, however, to increase the balance. For the next three years, in the base, optimistic and pessimistic scenarios, net lending to the economy (now RUB 3tn) is to increase to RUB 6-7tn, or even farther. The refinancing system needs to be improved: from collateral issues toward refinancing, with higher durations.
The move toward Basel-2 and Basel-3 is gradual and will be continued.
Financial stability, as well as monetary stability, is a key area of concern for the regulators. Global central banks are mandated not only to ensure price stability, but financial stability, too. The CBR is also going this way.