Speaking at a Russian Central Bank event in Moscow on Sept. 1, bank Governor Elvira Nabiullina again insisted that Russia should not return to the strict capital controls adopted back in February 2022 which successfully stopped capital flight and defended the value of the ruble in the face of international financial warfare. Russia, she stated, should instead keep raising interest rates to try to keep volatile capital from fleeing the country. Even as the value of the ruble continued to drop over the last 10 days—from 93.5 to 96.4 rubles to the dollar—Nabiullina argued that “the outflow of capital is a preference for hard currency” which should be “treated with completely different methods, including the key (interest) rate.”
Raising interest rates in this fashion is a fool’s errand, universally advocated by City of London and Wall Street bankers, using the specious argument that people will always find a way around capital and exchange controls, so why bother. In reality, raising rates in this manner will only strangle the domestic economy and it won’t succeed in stopping capital flight in any event—both of which are policy objectives of Russia’s enemies. Nabiullina has already raised interest rates from 7.5% to 12%, and she stated on Sept. 1 that further increases may be required.
The contrary policy view was stated at the same event by Finance Minister Anton Siluanov, who argued that “we are for tighter measures on control over (currency) flows,” according to a report in TASS.
