Yevgeny Fyodorov: “The position of the Central Bank is not regulated by the country's internal problems, but by the IMF”

Interview by Vestnik Kavkaza

Six months ago, Yevgeny Fyodorov, a MP from United Russia, suggested initiatives on returning of “economic sovereignty” to Russia. One of ideas by the member of the State Duma Committee on Budgets and Taxes is to change activity of the Central Bank at the legal level in such a way that it would stop being a sponsor of Western countries and start working for Russian interests. Fyodorov told Vestnik Kavkaza that the current fall of the ruble wouldn’t stop in the near future, and the Central Bank should be blamed for this.

-          What will happen to the ruble exchange rate in the nearest future?

-          Russia is a country with an undervalued currency. Therefore, even in the absence of international reserves of the Central Bank (as we have found out, there are none at the moment, because the Central Bank is not using them to support the ruble albeit the constitution demands it), even in the current situation with the dollar worth 36 rubles, 37 rubles, it has stabilized thanks to the great economic potential of the country. But if we shift towards the internal mechanisms of investment, by replacing foreign lending in the Russian economy, if this policy is adopted it will lead to rapid economic growth and a drastic increase in demand for the ruble, perhaps additional issuing aimed at supporting economic growth.

It is not possible to say what is going to happen, because the position of the Central Bank is not regulated by the country's internal problems, but by the IMF. The IMF has a rather negative approach to Russian economic growth, that is, we are likely to be given advice that will have a negative impact on the Russian economy. It is the matter of political struggle, to what extent the CB of Russia and the government will follow this advice.

-          Why have the dollar and euro exchange rate grown in recent time?

-          The CB has directly violated the Constitution, which states that it is obliged to support the ruble. In order to do this, the constitution has allocated great international reserves to it. These reserves constitute half a trillion dollars at the moment. This means that there are no reserves like that, and the Central Bank is not able to fulfill its constitutional function (if I understand it correctly, the dismissal of the general lawyer of the CB is related to it). I think that it should openly talk about it with the people and launch new mechanisms associated with changes in the principle of operation of the CB, amend the Law on the Central Bank by introducing the principle that the CB has to serve the national economy. It isn't connected with the national economy at all at the moment. These actions should be followed by a constitutional reform aimed at creating institutions which will substitute for the IMF and will be responsible for the development of Russian national policy in foreign economics. It will lead to a 24-fold strategic growth of the Russian economy.

***

According to Fyodorov, the CB reserves are $0.5 trillion. “It is almost twofold more than the cash stock of money and it is almost a half of all money of the country. It means that if we decided to get rid of all existing rubles and we exchanged them for foreign currency, only a half of reserves would be spent on this.

And there is no problem with the exchange rate or with the support of ruble. It will remain 1 to 30 for sure, even if all ruble cash disappears. Thus, we understand that if the CB breaks all possible legal and constitutional instructions, there are reasons for this. The reasons are simple – the CB has no international reserves. So, let’s be honest and tell people that reserves ran out during the fall of ruble. And the boxes are empty.”

Fyodorov is sure that the CB supports budgets of foreign stated. “We can see a standard constitutional crisis of the CB which is connected with its constitutional status, its separation from the state and providing interests of foreign countries. We have stated certain figures in two months: 150 billion plus about 60 billion (the capital outflow). So, we have spent about $250 billion on supporting the American economy and budget, due to relations between the Federal Reserve System and the USA budget. It is a significant sum for supporting the American budget which experiences difficulties. The problem is that the sum is being paid by Russian citizens. It will be reflected in inflation, a reduction of living standards, salaries, pensions, and so on. It will also be reflected in slower development of the country.”