Russian lawmakers approved the largest expansion of the central bank’s powers since it was established more than two decades ago by broadening its oversight to include brokerages and financial organizations.
The lower house of parliament passed sweeping changes making the bank a unified financial regulator and introducing economic growth into its policy mandate, according to a copy of the changes posted on the State Duma website. The changes also extend central bank board members’ terms to five years from four and increase the board to 15 people from 13. The bill must be approved by the upper house of parliament and signed by President Vladimir Putin.
“The main goal of Bank Rossii’s monetary policy is defending and ensuring the steadiness of the ruble by supporting price stability, including to create the conditions for balanced and steady economic growth,” according to the legislation.
Russia is adding the economic growth language as policy makers prepare to begin formally targeting inflation starting in 2015 and following a dispute among government officials earlier this year about whether the central bank needed to move more quickly to support the economy by lowering interest rates.
Central bank Chairman Elvira Nabiullina, who took over for Sergey Ignatiev last month, said in an interview that overcoming a slower economy would be her priority. Nabiullina and Ignatiev both argued against the need for a growth mandate alongside inflation, saying Bank Rossii contributes to economic prospects by seeking to ensure low and stable prices.
Still, Ignatiev told lawmakers June 19 that a carefully worded mention of growth similar to the European Central Bank’s mandate would be possible, as long as inflation comes first. Lawmakers may further review the mandate later this year or next as the central bank completes the switch to targeting inflation.
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