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Working paper

Could the Bank of Russia Implement Strategic Indicators to Improve its Effectiveness?

This research explores the utility of using strategic indicators to track the performance of the Bank of Russia. This approach is used in international practice and has demonstrated its positive effect. Nowadays, the Bank of Russia has introduced one key indicator, the size of inflation, which has proven to be highly effective in terms of policy implications. This article argues that this approach could be extended to other strategic areas like banking regulation, financial regulation, and oversight of the national payment system, and offers ideas on improving the approach for a given target purpose. Second, the article demonstrates the potential utility of such an extension by focusing on financial stability. An empirical model of banking stability is developed based on factors originating in both the external and internal environment of the Bank of Russia. The results of the model suggest that a number of factors contribute to stability, which in turn suggests that the strategic indicators approach can play a useful role in this area