Deputy Chairman of the Central Bank warned against creating autarchy in Russia

 Deputy Chairman of the Central Bank: autarky will lead to a decrease in welfare and slow down the development of the economy

Strengthening economic isolation will lead to a decrease in welfare and slow down economic development, said Ksenia Yudaeva, First Deputy Chairman of the Central Bank. The head of the regulator, Elvira Nabiullina, also warned about the consequences of financial autarchy.

The Russian economy has shown that it can adapt to Western sanctions, but it must remain highly adaptable in the future, since the oil embargo began to operate recently (on the supply of crude oil - on December 5, and on oil products - on February 5); in addition, there is a risk of new restrictions or increased secondary sanctions, Ksenia Yudaeva, First Deputy Chairman of the Bank of Russia, wrote in an article for the Economic Conversation magazine.

Yudaeva urged not to allow, in these conditions, the strengthening of economic isolation “and even more so sliding into autarchy”, as this will lead to a decrease in welfare and slow down economic development, “even if the economy shows relatively high rates of compensatory or recovery growth for some time.”

The deputy chairman of the Central Bank believes that from the point of view of economic development and financial stability, it is important to maintain economic ties and form production chains "at least with friendly countries."

The head of the Central Bank, Elvira Nabiullina, also warned about the consequences of autarky, self-isolation of the financial system. She emphasized that the sovereign financial system should develop with integration into international markets.

In August, experts from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), speaking about scenarios for the development of the economy, called autarky unlikely, when Russia would “do everything on its own” to the maximum extent possible, albeit at the expense of a decrease in the technological level of manufactured products, a fall in its consumer and operational characteristics, a decrease in the standard of living of the population (probability - 13%). Such a development of events will be possible in the event of an escalation of the military conflict, they suggested. According to experts, with the highest probability (47%), the Russian economy will follow the path of inertial development, which will lead to a new stagnation.

Shutting down some economic information due to sanctions last year may have reduced the risks associated with restrictions, Yudaeva said, but Russian economic agents have become less able to make decisions based on real data. “Those who make investments in the financial markets are particularly affected,” she writes. In this regard, the regulator began to open up information and calls for such a policy in all areas, except those “where sanctions risks are real and directly increased,” the first deputy chairman said.

Due to the sanctions associated with the narrowing of the possibility of making settlements in dollars and euros, Russia has to build alternative settlements. “One of the ways to adjust the economy to the new payment realities was, let’s say, the outsourcing of financial services to the financial systems of other countries,” Yudaeva writes (which countries are not specified). According to her, this applies to companies for which the requirement for a mandatory return of foreign exchange earnings has been canceled, and citizens who "actively use the banking systems of other countries to pay for travel and import goods, as well as to store savings." They need to take into account the risks of secondary sanctions and monitor the stability of financial institutions in other countries, the deputy chairman of the Central Bank noted.

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