Russian financial markets and monetary policy instruments

​Abstract
The Russian financial markets are small for an economy the size of Russia, and in many respects underdeveloped. This restricts the Central Bank of Russia’s scope for conducting monetary policy. In this paper we provide an overview of the Russian financial markets and the CBR’s variegated collection of monetary policy tools and their effectiveness. The Russian monetary and exchange rate policy framework is currently in the process of change. During most of the 2000s, the CBR tightly steered the ruble’s external value, which left little room for active monetary policy. After the 2008–2009 crisis, the bank began to loosen the reins of exchange rate management with the aim of moving gradually to a regime of inflation targeting. Since the monetary policy tools are still not highly effective, the big challenge for monetary authorities is improve the tools.