Translation. Region: Russian Federation –
Source: Peoples'Friendship University of Russia
An important disclaimer is at the bottom of this article.
Our university has strong ties with leading institutions in the Russian financial system and the professional business community. This was further confirmed by the All-Russian Scientific Conference of RUDN and the Bank of Russia on Monetary Policy. The event brought together over 300 representatives of the financial sector, including representatives from the Bank of Russia, the Russian Academy of Sciences, businesses, the financial sector, and faculty and students from leading federal universities.
"RUDN University is a recognized international platform for the academic community, government officials, and business representatives. This time, the conference was held at the national level, but in the future, we plan to expand it to the international level, which will contribute to the development of unified approaches in the financial sector for associations such as the SCO, BRICS, the CIS, and the EAEU," said Maria Zhukova, Advisor to the Rectorate of RUDN University on Sustainable Development, member of the Board of Directors of the credit institution, and member of the Shareholder Advisory Council of VTB Bank (PJSC).
The conference featured a Bank of Russia communications session and a roundtable discussion on monetary policy research. Participants discussed the current trends in central bank monetary policy and prospects for developing regulatory instruments and models in the current environment. Speakers presented the latest practices and strategies in monetary policy, as well as key research findings in this area.
About the key reference and the model apparatus
Young scientists from RUDN University and other leading federal universities participated in the communication session. The speakers shared the results of the Bank of Russia's analytical work. Alexander Morozov, Director of the Bank of Russia's Research and Forecasting Department, outlined global economic trends, including those that have occurred since the 2008 crisis. He also shared current developments in the Russian economy and described how the Bank of Russia achieves its goals, including through the key interest rate.
"Since 2008, the number of countries that adopted fiscal rules, thereby stabilizing finances, has almost doubled. The situation has also changed in terms of the strength of their application. While before 2008, countries had practically never used them, afterward, the strength and effectiveness of fiscal rules increased dramatically. They largely ensured the stability of the Russian economic system during the crises we experienced in 2014, 2020, and 2022," says Alexander Morozov.
Alexander Gennadyevich explained that the key rate cut cannot be as rapid as the Russian population expects, as it will be followed by price increases. This will lead to even higher price expectations.
"The economy needs a period of stabilization before returning to a growth trajectory, so the end of 2025 and the first half of 2026 will truly be the most challenging for business. After that, the situation will improve. This is the price we pay for failing to prevent the economy from overheating. But if nothing is done, a recession is inevitable. Today, the economy isn't growing, but it's certainly not declining," says Alexander Morozov.
Mikhail Zhemkov, Head of the Economic Analysis Department of the Bank of Russia's Monetary Policy Department, explained why the bank uses modeling and which models are considered "correct" and "useful." He noted that combined models are now often used in academic research. He also noted that scientists shouldn't rely on a single model; they should use various variations and scenarios.
"Models shouldn't be based solely on past ('vintage') data. As such, they don't allow for predicting unexpected changes in the economy. Models must incorporate expert judgment and include various variations," says Mikhail Zhemkov.
Natalia Makhankova, Chief Economist of the Macroeconomic and Financial Research Department of the Bank of Russia's Research and Forecasting Department, explained to conference participants why and in what areas the bank conducts economic research.
"Today, the second version of the Bank of Russia's economic research guidelines for 2023-2025 was published. They are available on the bank's website. The report includes an overview of monetary economics and monetary policy, development directions for the financial sector and prudential policy, and an assessment of challenges facing the Russian economy," said Natalia Makhankova.
Making things clear
Young scientists from our university were pleasantly surprised by the transparency and accessibility of the information presented by Bank of Russia representatives in their reports.
"Despite the complexity of the topic, the speakers were able to clearly explain important concepts. It was important for me to understand the jurisdiction of central banks, their ownership, and what constitutes true central bank independence. Alexander Gennadyevich clearly explained what de facto central bank independence is and what happens in countries where it exceeds, or has exceeded, the legally prescribed limits. Now I understand that there is an inverse relationship between the level of de facto central bank independence, the level of inflation, and inflation expectations. I understand that if the central bank and the government act in unison, deviations will be minimal and the consequences of the crisis will be insignificant," says Diarra Suleiman, PhD student in the Department of Finance, Accounting, and Audit.
"Informative and relevant. We learned about global trends and how the Bank of Russia influences the economy through key rate changes. We all monitor key rate dynamics. Now I understand how its changes affect the yield of financial instruments, as well as interest rates on loans and deposits at commercial banks," said Farid Iskhan, a postgraduate student in the Department of Finance, Accounting, and Audit.
The Central Bank's plans to introduce a digital ruble have generated great interest among students.
"We hope that banks will fully utilize the smart contract functionality built into the digital ruble. The introduction of the digital ruble does not pose any systemic risks," said Alexander Morozov.
Labor market, inflation, regions
The discussion on current issues of monetary policy implementation continued at a roundtable discussion attended by the RUDN University academic community, representatives of the Bank of Russia, the Institute of Economic Forecasting of the Russian Academy of Sciences, the Research Institute of Innovative Financial Instruments and Technologies of the Plekhanov Russian University of Economics, the Financial University under the Government of the Russian Federation, and other leading Russian universities.
"The opportunity to hear the Bank of Russia's position and present the academic and business community's perspective on the bank's monetary policy, in direct dialogue with the organization's representatives, is truly invaluable," said Inna Andronova, Dean of the Faculty of Economics at RUDN University.
Evgeny Postnikov, Head of the Data Processing Sector at the Economic Department of the Central Federal District Main Administration of the Bank of Russia, presented the results of a study examining the impact of structural changes in the labor market on the Bank of Russia's monetary policy decisions, using the logic of "sanctions shock—transition to import substitution—increased labor demand, labor shortage—wage growth."
"When tensions are heightened, supply shocks in the labor market have a lesser impact on inflation. In such a situation, costs are shifted to competition for labor in the labor market. At the same time, inflation expectations rise," says Evgeny Postnikov.
Georgy Ivannikov, Chief Economist of the Industry Analysis and Enterprise Monitoring Department of the Economic Department of the Central Federal District Main Administration of the Bank of Russia, discussed the evaluation of central bank communications as a tool for inflation management, using Argentina as an example. The country is of interest for study because it is experiencing triple-digit inflation.
"The weaknesses of the Argentine central bank's communication mechanism include the lack of transparency in its monetary policy decision-making process, the lack of clarity in published materials, and the frequent changes in quantitative values. Even the relatively high level of education among the population compared to other Latin American countries doesn't improve the situation," says Georgy Ivannikov.
Valeria Zvereva, economic advisor to the Bank of Russia's Department of Sectoral and Regional Monitoring, Monetary Policy, revealed distortions in the transmission mechanism caused by factors of regional economic inequality, including income and asset structure.
"Setting a key rate at the national level confirms that regional inflation is responding to it appropriately, and that, in principle, the factor of regional disparities must be taken into account. However, despite all this, the transmission mechanism in its current form, despite the shocks of recent years, structural shifts, and the development of communication, is working quite successfully," Vera Zvereva.
Intellectual resources
The conference also featured a competition for young researchers (undergraduates, graduate students, and faculty members under 35) to submit papers on current monetary policy methods and models in Russia and globally. Seventeen papers were submitted for review. Representatives of the Bank of Russia were among the experts.
"The competition is an important and significant tool for pooling the intellectual resources of young scientists to address specific monetary policy challenges relevant to the domestic economy. Such initiatives are particularly valuable to us, as they not only help us identify talented young people but also help us develop a new generation of scientists whose work is focused from the outset on making a real contribution to the economy," said Elena Buzdalina, Head of the Economic Department of the Central Federal District Main Administration of the Bank of Russia.
The winner of the competition was Alexey Shulga, a postgraduate student in the Department of Finance, Accounting, and Audit at the RUDN University Faculty of Economics. His thesis title was "A Hybrid Composite Mortgage Portfolio Model: Prioritizing Requirements and a Borrower's Digital Twin."
"The scientific novelty of my research lies in the formalization of a borrower's digital twin in a credit risk model that combines probabilistic, cost, and behavioral components into an interpretable portfolio prioritization index. HPCS can be used for targeted risk mitigation under resource constraints. Future plans include expanding the model to include behavioral dynamics over time, climate and social resilience factors, and conducting out-of-time validation and testing on alternative data," says Alexey Shulga.
Results and plans
The conference culminated in an open discussion on the effectiveness of monetary policy, including from the perspective of the real economy. RUDN University experts discussed the negative impact of a high key rate on the economy.
"As a representative of not only the academic community but also the business community, I openly state that it is physically impossible to operate under such a key rate. A priori, Russian business is uncompetitive under such conditions," said Inna Andronova, Dean of the Faculty of Economics at RUDN University.
"Expensive loans resulting from a high key interest rate are not the only tool for reducing inflation. On the contrary, it is necessary to stimulate increased business activity in the real sector of the economy," says Vladimir Chaplyuk, professor in the Department of Finance, Accounting, and Audit at RUDN University.
"It must be acknowledged that, given sanctions and a persistent budget deficit, the Bank of Russia is finding it difficult to find new short- and long-term instruments of intervention. But our key rate is truly exorbitant. No economy can withstand this in the long term," said Zhanna Golodova, Associate Professor of the Department of Finance, Accounting, and Audit at the Faculty of Economics at RUDN University.
In turn, representatives of the Bank of Russia once again spoke about the bank’s choice of monetary policy.
"Every country chooses its monetary policy regime based on its objectives. Each regime has its advantages and disadvantages. For Russia, inflation targeting is more effective. Consistently low inflation creates the preconditions for sustainable, balanced economic growth," says Anastasia Skuratova, Economic Advisor to the Central Federal District Economic Department of the Bank of Russia's Main Administration.
"Today, the Russian economy has become less dependent on external shocks than before. Demand is currently the primary factor, and it is this factor that the Central Bank influences with its key rate," said Elena Buzdalina, Head of the Economic Department of the Central Bank of Russia's Main Administration for the Central Federal District.
The results of the conference will be reflected in a summary of the meeting, which will form the basis for further cooperation between RUDN and the Bank of Russia.
Please note: This information is raw content obtained directly from the source. It represents an accurate account of the source's assertions and does not necessarily reflect the position of MIL-OSI or its clients.
