Nabiullina's nomination is a compromise step in the search of optimal policy

On the 12 March, President of the Russian Federation Vladimir Putin proposed candidate Elvira Nabiullina for the role of Head of the Bank of Russia. 

Elvira Nabiullina's nomination is a compromise step in the search of an optimal policy, since both the Ministry of Economic Development and the Ministry of Finance and the Central Bank should adopt a more coherent approach to solutions.

I partially agree with the opinion that her nomination to Head of the Central Bank is all about the easing of monetary policy. Previous management of the Central Bank had the reduction of inflation and the control of the exchange rate as its main objectives. This target is too narrow; the main objective of the Central Bank should be economic growth. I think Nabiullina will be able to combine the approach of stimulating economic policy, which she adopted whilst Minister of Economic Development, with reducing inflation, which was adopted by the previous management of the Central Bank.

In my understanding, the optimal economic policy should not only aim to reduce inflation, like a certain fetish, but also strive to provide quality and sustainable economic growth in the framework of financial stability. We can see that the Central Bank will not be able to cope with these approaches alone, together with that of the Ministry of Economic Development or the Ministry of Finance. Meanwhile I think it's not a good idea to expect a reduction in the refinancing rate and distribution of credits for one and all with the arrival of Nabiullina. In this respect a more balanced credit policy is necessary. 

In addition to the commitment to liberal economic fundamentals, Elvira Nabiullina possesses high intelligence. By the way, if we're talking about a mega-regulator, the main problem when you create it is the need to identify systemic risks in the financial sector and develop a model for monitoring them, which is precisely an intellectual challenge. I think Elvira Nabiullina will be able to cope with this challenge. 

A.L. Vedev – Director of the Centre for Structural Research