Elvira stabilizes Russian credit, debit, merchant and wholesale payments

Here is an interesting story in the New York Times on the central banker behind Russia’s decision to reposition the country after the 2014 Crimean crisis. We discussed many of his strategies in the recent Mercator webinar on the impact of Russian sanctions on the payments ecosystem. You can hear a replay of this event on this link.

Elvira Nabiullina is the person responsible for the protection of the Russian ruble. A few weeks ago, the Russian economy looked like the Kopeck, a fractional unit of the ruble, would be the defining currency. Yet his strategies are practical and seem to keep the economy in check. According to the NYT:

For the second time in less than a decade, Elvira Nabiullina is leading the Russian economy into dangerous waters.

In 2014, faced with the collapse of the ruble and soaring inflation after barely a year as head of the Central Bank of Russia, Ms Nabiullina forced the institution into the modern era of the economic policy-making by sharply raising interest rates. This politically risky move slowed the economy, kept the price spike in check and earned her an international reputation as a tough decision-maker.

In the world of central bankers, among the technocrats responsible for keeping prices in check and the stability of financial systems, Ms Nabiullina has become a rising star for using orthodox policies to manage an unruly economy often tied to the price of oil.

Ms. Nabiullina has a key role in Putin’s cabinet.

It is now up to Ms Nabiullina to steer Russia’s economy through a deep recession and keep its financial system, cut off from much of the rest of the world, intact.

The challenge follows years she spent bolstering Russia’s financial defenses against the kind of powerful sanctions wrought in response to President Vladimir V. Putin’s geopolitical aggression.

She guided the extraordinary rebound of The currency of Russia, which lost a quarter of its value a few days after the invasion of Ukraine on February 24. The central bank has taken aggressive action to prevent large sums of money from leaving the country, stop panic in the markets and halt a potential run on the banking system.

One of the key lessons from Mercator’s Webex is that Russia has built a strong infrastructure to handle its payment requirements. Of debit perspective, the Russian national payment system can substitute for payroll distribution and local transactions. However, things are not so rosy on the credit channel because bank liquidity is low. the Merchant the feature ported to Mir and the national payment system will work as usual. But for high enterprise value/low volume paymentsRussia will struggle to replace SWIFT, the global banking clearing network.

Elvira continues.

In her last crisis, she turned disaster into opportunity. In 2014, Russia was rocked by a double economic shock: a crash in oil prices – caused by an increase in US production and Saudi Arabia’s refusal to cut production, which weighed on oil revenues of Russia – and the economic sanctions imposed after the annexation of Crimea by Russia.

Along with her record on monetary policy, Ms Nabiullina has received praise for pursuing a deep cleanup of the banking sector. In her first five years at the bank, she revoked about four hundred banking licenses — essentially shutting down a third of Russian banks — to weed out weak institutions that carried out what she called “dodgy transactions.”

And at first glance, the central banker looks like she has a heart:

In March, Bloomberg News and The Wall Street Journal, citing unidentified sources, reported that Ms Nabiullina tried to resign after the invasion of Ukraine and was rebuffed by Mr Putin. The central bank dismissed these reports.

“We are in an area of ​​enormous uncertainty,” Ms Nabiullina said.

Preview by Brian RileyDirector, Credit Advisory Services at Groupe Conseil Mercator