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The 2014–15 Financial Crisis in Russia and the Foundations of Weak Monetary Power Autonomy in the International Political Economy
Södertörn University, Centre for Baltic and East European Studies (CBEES). Stockholm University.ORCID iD: 0000-0002-3557-1298
Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation.
2019 (English)In: New Political Economy, ISSN 1356-3467, E-ISSN 1469-9923Article in journal (Refereed) Epub ahead of print
Abstract [en]

This article contributes to international political economy debates about the monetary power autonomy (MPA) of emerging market and developing countries (EMDs). The 2014–15 Russian financial crisis is used as a case study to explore why an accumulation of large international reserves does not provide protection against currency crises and macroeconomic adjustments in EMDs. The analysis centres on the interplay between two dimensions of MPA: the Power to Delay and the Power to Deflect adjustment costs. Two structural factors condition Russia’s low MPA. First, the country’s subordinated integration in global financial markets increases its financial vulnerability. The composition of external assets and liabilities, combined with cross-border capital flows, restrict the use of international reserves to delay currency crises. Second, the choice of a particular macroeconomic policy regime embraced the financialisation of the–mainly state-owned–Russian banking sector, thus making it difficult to transform liquidity inflows into credits for enterprises. Russia’s main comparative advantage, hydrocarbon export revenues, is not exploited. The type of economy created due to the post-Communist transition means that provided ‘excessive’ liquidity remains in the financial system and is channelled into currency arbitrage. This factor increases exchange rate vulnerability and undermines Russia’s MPA.

Place, publisher, year, edition, pages
Routledge, 2019.
Keywords [en]
currency crisis, financial globalisation, financialisation, International monetary power, Russian monetary policy
National Category
Economics
Research subject
Baltic and East European studies
Identifiers
URN: urn:nbn:se:sh:diva-38296DOI: 10.1080/13563467.2019.1613349ISI: 000469548300001Scopus ID: 2-s2.0-85065793120OAI: oai:DiVA.org:sh-38296DiVA, id: diva2:1323183
Funder
The Foundation for Baltic and East European StudiesÅke Wiberg FoundationHelge Ax:son Johnsons stiftelse Available from: 2019-06-11 Created: 2019-06-11 Last updated: 2019-06-13Bibliographically approved

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Viktorov, Ilja

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