ELVIRA NABIULLINA’S first encounter with capitalism came during her university days, when she enrolled in a course called “Critique of Western Economic Theory”. It was an unusual start for a modern central banker. These days she embodies another contradiction. Russia’s economy has been held back for years by corruption and rent-seeking, and more recently by Western sanctions and the low price of oil and gas, the country’s main exports. Yet the Central Bank of Russia (CBR) is a model of competent, technocratic policymaking. Since Ms Nabiullina became governor in 2013, the CBR has kept Russia’s economy, awful though it is, out of worse trouble.
The soft-spoken Ms Nabiullina has humble roots. Her mother worked in a factory; her father was a chauffeur. For years she has been at the centre of Russia’s turbulent transition to a market economy. When Vladimir Putin became president in 2000, he proclaimed a break with the chaos of the 1990s. But when it came to economics “Putin didn’t have clear ideas,” says Yevgeny Yasin, a former economy minister. He thus entrusted economic policy to a cadre of professionals with orthodox views, including Ms Nabiullina, who became deputy economy minister in 2000 and minister in 2007, an experience she calls “the most influential” on her approach to economics.
The crisis of 2008-09, when oil prices fell and the world economy stagnated, revealed that the Russian economy was dependent on flighty foreign hedge funds and retail investors. As they pulled money out, the CBR tried to prop up the value of the rouble, losing over $200 billion of foreign-exchange reserves in a matter of months (see chart). Lending shrivelled across the economy. In 2009 GDP shrank by 8%.
That prompted Russia to enact two sets of reforms, in preparation for the inevitable next oil-price crash. First, it diversified its sources of funding. In 2013, for instance, Russian regulators made it possible for Euroclear and Clearstream, two international securities depositories, to begin