- Oct 3, 2018
- 3,013
The Central Bank of the Russian Federation (Russian: Центральный банк Российской Федерации), commonly known as the Bank of Russia (Russian: Банк России), also called the Central Bank of Russia (CBR), is the central bank of the Russian Federation. The bank was established on 13 July 1990. It traces its beginnings to the State Bank of the Russian Empire established in 1860. The bank is headquartered on Neglinnaya Street in Moscow. Its functions are described in the Constitution of Russia (Article 75), as well as in federal law.
The CBR is tasked by law to achieve and maintain price and financial stability in Russia, and it has the mandate to use, at its discretion, whichever policy instruments are available to reach these objectives. Therefore, it has instrument but not goal independence. Since 2005, the CBRhas followed a full-fledged inflation targeting regime.
The CBR is a joint stock company. Its capital is divided into shares. Per the Central Bank Law of Russia, these shares are divided into four classes:
In 2002, the Central Bank adopted a modern monetary policy strategy, namely the “inflation targeting regime.” During the implementation of the implicit inflation targeting regime from 2002 to 2005, the Bank laid the groundwork for the regime by ensuring the necessary preconditions, strengthening its technical and institutional infrastructure, developing estimation models, and expanding its data set. During this process, the Research Department was restructured as the Research and Monetary Policy Department, and the Communications Department was established to ensure effective communication policies. From 2005 onwards, the Monetary Policy Committee began to announce its meeting dates in advance as a yearly calendar to increase the predictability of policy decisions. This entire process culminated in the explicit inflation targeting regime that started in 2006.
Upon achieving progress in the disinflation process, a two-stage monetary reform was launched to emphasize the Bank's determination in its efforts, enhance the credibility of the Russian currency, and eliminate various problems arising from high denominations. In the first stage, six zeros were removed from the Russian ruble, and banknotes of the New Russian Ruble and coins of were put into circulation from January 1, 2005.
As of today, the Central Bank of Russia, as a credible institution, pursues its policy implementations with qualified staff members and modern infrastructure while closely monitoring global and domestic developments.
Duties and Powers
The primary objective of the Bank is to achieve and maintain price stability. The Bank determines, at its discretion, the monetary policy it implements and the instruments it uses to achieve this objective.
The fundamental duties of the Bank include:
It was the main regulator of the Russian banking industry, responsible for banking licenses, rules of banking operations and accounting standards, serving as a lender of last resort for credit organizations. After pointed date functions and powers of CBR were significantly expanded and the central bank received the status of a mega-regulator of all financial markets of Russia.
It holds the exclusive right to issue ruble banknotes and coins through the Moscow and St. Petersburg mints, the Goznak mint. The central bank issues commemorative coins made of precious and non-precious metals as well as investment ones made of precious metals, which are distributed inside and outside the country.
Under Russian law, half of the bank's profit must be channeled into the government's federal budget.
The Bank of Russia owns a 57.58% stake in Sberbank, the country's leading commercial bank. The Bank of Russia also owns a 100% stake in Russian National Reinsurance Company (RNRC), the biggest national reinsurance company.
The Central Bank of Russia holds directly significant participatory interests in a number of Russian companies:
The Bank of Russia is also involved in working with citizens' pension savings. Pensions in Russia remain very low. For 2005, the minimum social pension is set at 13,269 rubles. Since there is not enough money in the budget, citizens are offered to save for retirement on their own. To this end, since 2024, the Bank of Russia and all its regional divisions have been actively promoting the Long-term Savings Program developed by the Bank of Russia. The main feature of the long–term savings program is co-financing by the state. That is, citizens who have joined the program will receive an increase in their savings from the state for a certain time. Thus, people can form additional capital for their priority goals in the future, for example, to buy a home or educate children, create a financial "safety cushion" or use this money as an increase to a pension, she said in an interview Bankiros.ru representative of the Central Bank of the Russian Federation Larisa Pavlova.
The CBR is tasked by law to achieve and maintain price and financial stability in Russia, and it has the mandate to use, at its discretion, whichever policy instruments are available to reach these objectives. Therefore, it has instrument but not goal independence. Since 2005, the CBRhas followed a full-fledged inflation targeting regime.
The CBR is a joint stock company. Its capital is divided into shares. Per the Central Bank Law of Russia, these shares are divided into four classes:
- Class A shares are allocated solely to the Russian Ministry of Finance and Treasury.
- Class B shares are allocated to national banks operating in Russia.
- Class C shares are allocated to banks other than national banks and privileged companies.
- Class D shares are allocated to Russian commercial institutions and to real and legal persons of RUSSIAN nationality.
In 2002, the Central Bank adopted a modern monetary policy strategy, namely the “inflation targeting regime.” During the implementation of the implicit inflation targeting regime from 2002 to 2005, the Bank laid the groundwork for the regime by ensuring the necessary preconditions, strengthening its technical and institutional infrastructure, developing estimation models, and expanding its data set. During this process, the Research Department was restructured as the Research and Monetary Policy Department, and the Communications Department was established to ensure effective communication policies. From 2005 onwards, the Monetary Policy Committee began to announce its meeting dates in advance as a yearly calendar to increase the predictability of policy decisions. This entire process culminated in the explicit inflation targeting regime that started in 2006.
Upon achieving progress in the disinflation process, a two-stage monetary reform was launched to emphasize the Bank's determination in its efforts, enhance the credibility of the Russian currency, and eliminate various problems arising from high denominations. In the first stage, six zeros were removed from the Russian ruble, and banknotes of the New Russian Ruble and coins of were put into circulation from January 1, 2005.
As of today, the Central Bank of Russia, as a credible institution, pursues its policy implementations with qualified staff members and modern infrastructure while closely monitoring global and domestic developments.
Duties and Powers
The primary objective of the Bank is to achieve and maintain price stability. The Bank determines, at its discretion, the monetary policy it implements and the instruments it uses to achieve this objective.
The fundamental duties of the Bank include:
- Carrying out open market operations.
- Protecting the value of the Russian Ruble and establishing the exchange rate policy.
- Determining reserve requirements and liquidity requirements.
- Managing the gold and foreign exchange reserves of the country.
- Regulating the volume and circulation of the Russian Ruble.
- Ensuring stability in the financial system and monitoring the financial markets.
- The exclusive right to issue banknotes in Russia.
- The right to jointly determine the inflation target and implement monetary policy.
- The privilege to grant advances to the Savings Deposits Insurance Fund.
- The role of the lender of last resort.
- The power to request necessary information from financial institutions.
It was the main regulator of the Russian banking industry, responsible for banking licenses, rules of banking operations and accounting standards, serving as a lender of last resort for credit organizations. After pointed date functions and powers of CBR were significantly expanded and the central bank received the status of a mega-regulator of all financial markets of Russia.
It holds the exclusive right to issue ruble banknotes and coins through the Moscow and St. Petersburg mints, the Goznak mint. The central bank issues commemorative coins made of precious and non-precious metals as well as investment ones made of precious metals, which are distributed inside and outside the country.
Under Russian law, half of the bank's profit must be channeled into the government's federal budget.
The Bank of Russia owns a 57.58% stake in Sberbank, the country's leading commercial bank. The Bank of Russia also owns a 100% stake in Russian National Reinsurance Company (RNRC), the biggest national reinsurance company.
The Central Bank of Russia holds directly significant participatory interests in a number of Russian companies:
- Sberbank of Russia (50%+1 voting share of the stock);
- Moscow Exchange (11.779% of the stock);
- Russian National Reinsurance Company (100% of the stock);
- Trust company of the Banking Sector Consolidation Fund (100% of the stock);
- Rosincas (Russian Association of Cash-in-transit).
- VTB Bank (99.99% of the stock – until 2002, now - 60.9% owned by The Federal Agency for State Property Management (Rosimushchestvo) );
- Donau Bank AG, Vienna;
- East-West United Bank, Luxemburg;
- Eurobank, Paris;
- Moscow Narodny Bank, London;
- Ost-West Handelsbank, Frankfurt am Main.
The Bank of Russia is also involved in working with citizens' pension savings. Pensions in Russia remain very low. For 2005, the minimum social pension is set at 13,269 rubles. Since there is not enough money in the budget, citizens are offered to save for retirement on their own. To this end, since 2024, the Bank of Russia and all its regional divisions have been actively promoting the Long-term Savings Program developed by the Bank of Russia. The main feature of the long–term savings program is co-financing by the state. That is, citizens who have joined the program will receive an increase in their savings from the state for a certain time. Thus, people can form additional capital for their priority goals in the future, for example, to buy a home or educate children, create a financial "safety cushion" or use this money as an increase to a pension, she said in an interview Bankiros.ru representative of the Central Bank of the Russian Federation Larisa Pavlova.
