Elvira Nabiullina: Even Russia's Central Bank Chief Is Vastly Superior To Ours The Feds

NYTimes |  For the second time in less than a decade, Elvira Nabiullina is steering Russia’s economy through treacherous waters.

In 2014, facing a collapsing ruble and soaring inflation after barely a year as head of the Central Bank of Russia, Ms. Nabiullina forced the institution into the modern era of economic policymaking by sharply raising interest rates. The politically risky move slowed the economy, tamed soaring prices and won her an international reputation as a tough decision maker.

In the world of central bankers, among technocrats tasked with keeping prices under control and financial systems stable, Ms. Nabiullina became a rising star for using orthodox policies to manage an unruly economy often tethered to the price of oil. In 2015, she was named Central Bank Governor of the Year by Euromoney magazine. Three years later, Christine Lagarde, then the head of the International Monetary Fund, effused that Ms. Nabiullina could make “central banking sing.”

Now it falls to Ms. Nabiullina to steer Russia’s economy through a deep recession, and to keep its financial system, cut off from much of the rest of the world, intact. The challenge follows years she spent strengthening Russia’s financial defenses against the kind of powerful sanctions that have been wielded in response to President Vladimir V. Putin’s geopolitical aggression.

She has guided the extraordinary rebound of Russia’s currency, which lost a quarter of its value within days of the Feb. 24 invasion of Ukraine. The central bank took aggressive measures to stop large sums of money from leaving the country, arresting a panic in markets and halting a potential run on the banking system.

In late April, Russia’s Parliament confirmed Ms. Nabiullina, 58, for five more years as chairwoman after Mr. Putin nominated her to serve a third term.

“She’s an important beacon of stability for Russia’s financial system,” said Elina Ribakova, the deputy chief economist of the Institute of International Finance, an industry group in Washington. “Her reappointment has symbolic value.”

Cleaning up the banks

Besides her record on monetary policy, Ms. Nabiullina has drawn praise for pursuing a thorough cleanup of the banking industry. In her first five years at the bank, she revoked about 400 banking licenses — essentially closing a third of Russia’s banks — in an effort to cull weak institutions that were making what she termed “dubious transactions.”

It was considered a brave crusade: In 2006, a central bank official who had started a vigorous campaign to close banks suspected of money laundering was assassinated.

“Fighting corruption in the banking sector is a job for very courageous people,” said Sergei Guriev, a Russian economist who left the country in 2013 and is now a professor at Sciences Po in Paris. He called her program flawed, though, because it was largely limited to private banks. This created a moral hazard problem that left state-owned banks feeling comfortable taking on lots of risk with the protection of the government, he said.

Ms. Nabiullina’s integrity has never been questioned, added Mr. Guriev, who said he had known her for 15 years. “She’s never been suspected of any corruption.”