The article examines how informal networks inside the Russian state influenced the formation and further development of the country’s financial markets during the 1990s and 2000s. The main argument is that the activities of these networks made it difficult to implement any coherent state regulation policy in the field. At the same time, rivalry between competing informal networks and different organizations contributed to institutional development and some improvements. The result was a dualist institutional structure of the Russian speculative financial markets that reproduced itself throughout the period in question. The study is based on in-depth interviews conducted at Moscow-based financial institutions.
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 themainly 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.
This article explores the expansion of the Russian state into financial markets after the 2008 global financial crisis. The main argument is that the Russian state has been unable to pursue its own developmental agenda in the sector despite increased regulation and state takeovers. While independent private market participants were pushed aside by state-controlled financial intermediaries, the state failed to follow its own policy strategy towards establishing an international financial centre in Moscow. Instead, the Russian financial market institutions were rendered into a vehicle for inter-bank lending under control of the Central Bank of Russia. Data from Russian stock market and corporate bond market trading highlights the trend. The study discusses the role played by informal power networks in redistribution of state-controlled resources and financial flows, and how this factor influenced the state regulation of financial markets in Russia.
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