BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 7/2005:
Optimal regulatory design for the Central Bank of Russia
Sophie Claeys ()
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; (follow links to similar papers)
JEL-Codes: G21; G28; (follow links to similar papers)
41 pages, July 8, 2005
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