Vladimir Putin and Russian Central Bank President Elvira Nabiullina in 2017. ALEKSEY NIKOLSKYI / Freelance Photographer / Getty Images
The Russian government said on Tuesday that capital controls ordered by Putin in October are effective and should be extended.
On the same day, Russia’s central bank said the impact of the measures was moderate and they should not be extended.
Current capital control measures, which require exporters to convert foreign exchange earnings into rubles, will expire on April 30.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by an editor.
Russian officials are publicly arguing over capital controls, highlighting disagreement among the country’s elite over how to handle the sanctions-hit economy.
Conflicting signals in Russia
On Tuesday, the Russian government said through its official Telegram channelthat capital controls ordered by President Vladimir Putin in October are effective and should be extended until the end of 2024, according to the news agency “Interfax“ reported.
Current capital control measures, which require exporters to convert foreign exchange earnings into rubles, will expire on April 30. They were introduced in October after the ruble collapsed by over 20 percent against the US dollar. After the measures were introduced, the ruble recovered somewhat, but was still 23 percent lower over the past 12 months.
“The measures proved effective and helped to stabilize the situation in the domestic foreign exchange market by achieving a sufficient level of foreign exchange liquidity,” First Deputy Prime Minister Andrei Belousov said in the government statement, according to Interfax. He said exporters are largely complying with capital controls and that this is helping sanctions-hit Russia with imports.
Die Russian central bank However, disagrees: The impact of capital controls is moderate and there is no “compelling reason” to extend the mandatory sale of foreign exchange earnings, it said in a separate “Interfax„-Message from Tuesday. The central bank added that high interest rates – currently at 16 percent – and strong growth in export earnings were having a greater impact on the foreign exchange market.
This is not the first time that Russian officials and the country’s central bank have aired their differences in public.
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Mutual blame between the government and the central bank
In August, Putin’s top economic adviser took aim at the central bank’s monetary policy, which he described as “soft” after the ruble collapsed against the dollar.
Elvira Nabiullina, the governor of Russia’s central bank and Putin’s top economic adviser, pushed back against the criticism, saying the ruble’s decline was due to changes in trade flows in and out of Russia as a result of sanctions.
She also mocked her critics and compared criticism of the Russian central bank to the Street lamp effect. She was referring to a specific cognitive distortion. The street lamp effect is illustrated by the story of a drunk person who looks for his lost keys under a lamp post rather than where he lost them.
“Blaming the central bank is like a drunk man’s search – he looks for the culprits where the light is,” she said at the time.
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