Putin aide called the “new reality” by the Central Bank to disaster

Advisor to the President of Russia, economist Sergei Glazyev criticized the “established policy of the Central Bank of new reality”. Earlier, first Deputy Chairman of the regulator Ksenia Yudaeva urged not to concentrate on the word “crisis” and said that the situation in the Russian economy is best described by the word “new reality”, which is determined not temporary difficulties, and new coordinates and new features.

“The new reality, artificially created by the management of the Bank of Russia is stagflation, stopped economic growth”, — said Glazyev in his Twitter. He noted that if not for the “new reality, the Russian economy “could grow at 6-8% per year”.

“In established by Bank of Russia of the new reality survive only speculators, and production dies. This is the path to economic disaster” — said Glazyev. In his opinion, Russia needs the release of “beyond the limits established by the Bank of Russia “new reality” on the path of economic growth.” “For this is to implement our program,” said Advisor to the President.

Earlier, first Deputy Chairman of the Bank of Russia Ksenia Yudaeva in an interview with “Izvestia” said, speaking about the Russian economy, not focused on the word “crisis”. “Our situation uchshe only describes the term “new reality”, i.e. it does not temporary difficulties, and new coordinates in which our economy will develop. And in this new reality there are various new opportunities,” she added.

Yudaeva noted that the situation continues to stabilize despite the second wave of the fall in oil prices. She stressed that the fall in oil prices pushes the economy to changes in the structure. “There are sectors in which new opportunities for development. And the first signs that this is happening, we see,” she explained and added that in certain sectors and companies in 2015, there was a significant increase in profit.

Earlier Glazyev and presidential Commissioner for entrepreneurs ‘ rights Boris Titov, and former Deputy MAYOR Andrey Klepach has prepared a report of the Stolypin club. In it, in particular, stated that the Russian economy has every opportunity to grow by up to 10% a year — faster than China is now growing, but you need to abandon the policy of belt-tightening and restrictions of the money supply in favour of large-scale stimulate economic growth — primarily through domestic version of quantitative easing.

In March this year, Prime Minister Dmitry Medvedev gave the course of this program, called “Economics of growth”. The Chairman of the Cabinet of Ministers sent the order to the Minister for open government Mikhail Abyzov, which must ensure the “coordination and participation of the interested Federal Executive authorities in the establishment and organization of the inter-departmental working group”, which will be involved in the project. Prime Minister’s press Secretary Natalya Timakova confirmed that Medvedev supported the need to work on this document.

In September 2015 Glazyev in an interview with “Газета.Ru” criticized the policy of the Central Bank and called it a failure. He stressed that ill-conceived policy by the regulator, in particular a sharp increase in the key rate, has led to the fact that investors had ceased to invest in the real sector of the economy and switched over to currency speculation that undermines the exchange rate, but it gives the speculators a profit. Attempts by the Bank of Russia to provide banks with funds for re-lending to industrial enterprises, according to Glazyev, only worsened the situation, leading to a complete loss of control of the financial-monetary market.

“Most of the money he gave to the refinancing of commercial banks, rushed there, in currency and financial speculation. And this resulted in the translation of our financial market in the turbulent regime, disruption of the investment process, the loss of control over all parameters. This is a clear failure of the Bank of Russia, which absorbed the functions of mega-regulator of the entire financial market. Having these functions a couple of years ago, the Central Bank and never mastered,” — said Glazyev.

He noted that currently “turbulent regime” on the Russian financial market is supported by foreign and Russian speculators that profit from the fluctuations in the exchange rate, but the amount involved in the money circulation exceeds the capacity of the Central Bank to stabilize the market. “The Central Bank lost control over the monetary sphere… the Economy has lost growth trajectory and fell into a crisis due to gross errors in monetary policy,” — said Glazyev.