Optimal regulatory design for the Central Bank of Russia

Sophie Claeys

No 7/2005, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (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.

Keywords: Central Bank; Prudential Regulation and Supervision; Monetary Policy Rules; Russia (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2005_007

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