Against this backdrop the ruble started to appreciate and the situation even allowed us to start replenishing our gold and foreign currency reserves. Now I will give you the details of our monetary policy in 2014. We have decided to grant the access to the main refinancing instruments to a wider range of banks (the so-called 3rd tier banks) and promptly extend the Lombard List. In making the Lombard List we abandoned the exclusive reliance on the international ratings agencies in order to reduce the dependence on them and make our own asset estimation. We are developing special purpose instruments to compensate for the so-called market failures and support lending in certain areas amid low availability of loans, high interest rates, and lack of long-term money. I am talking about four instruments – support of investment projects, small and medium-sized enterprises, military mortgages and non-commodity exports. The total of 290 billion rubles is currently allocated for these instruments. The special purpose instruments will be limited in volume in order to avoid distortions in monetary policy mechanisms. However, since we have introduced these instruments, they must prove effective. Currently, our main objective is to increase their efficiency. To summarise the results of the monetary policy we implemented last year, I would like to emphasise that, first, we acted in strict compliance with the functions assigned by the Constitution and the Central Bank Law, second, in the challenging conditions we tried to be flexible and to apply non-standard approaches, yet using only market mechanisms.

Elvira Nabiullina: Current economic environment and monetary policy in Russia Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the State Duma of the Russian Federation on the Bank of Russia Annual Report for 2014, Moscow, 16 June 2015. *  *  *  Good afternoon, distinguished colleagues! While introducing the Bank of Russia Annual Report, I will give a brief overview of our activities such as monetary policy, banking and financial market regulation and supervision, and the national payment system. Before passing on to the report, I would like to briefly describe the current economic situation, the environment, in which we implement our policy. The last year was a troubled one, oil price fall and financial sanctions emerged as serious challenges to the Russian economy. The economy has slowed while decline in investments became manifest in the period of high oil prices and rather low interests rates. This determined the specifics of the current situation – unfavourable developments in external conditions overlapped structural economic slowdown. The situation was especially challenging as the economic downturn coincided with high inflation. Currently, we have managed to curb inflation. According to our forecast, an economic growth (quarter-on-quarter) is expected to resume later this year. Certainly, a lot will depend on the efficiency of the joint efforts of the Government and the Central Bank. The observed improvement and financial stabilisation must be supported by structural changes. They are indispensable for a sustainable economic growth. These include a better business climate and higher labour productivity.