05.08.22 Sanctions Review

The Hybrid Resistance Economy: Russian Central Bank outlines the financial architecture of Russian economy's survival “without the West”

The Central Bank published a new report titled "The Financial Market: New Goals Under the Present Conditions" and subtitled "A Document for Public Discussion", however its significance goes far beyond its rather technical name.

In fact, it presents the first outline of the Russian "resistance economy" — a long-term strategy for the conditions of economic isolation from the Western developed economies that account for more than 60% of global GDP.

In includes such measures as: consistently and rapidly ousting currencies of the "unfriendly countries" from the Russian financial and real sector, as well as creating a system of incentives for financial institutions and citizens to invest in solving "problems of structural transformation of the economy, its modernization, achievement of technological sovereignty and reorientation of international economic ties”. The authors of the report do acknowledge that the main burden of financing these goals will fall on the state budget and the government’s "institutions of development", which will also be regularly recapitalized from the budget.

Incentives for private investors (who will be deprived of the opportunity to keep their savings in reliable currencies) are supposed to be created through a system of guarantees for private pension funds and increased access to the stock market and various financial instruments.