Institutional framework

In accordance with the Constitution of the Russian Federation and Federal Law 'On the Central Bank of the Russian Federation (Bank of Russia)' one of the key functions of the Bank of Russia (BoR) is to protect the ruble and ensure its strength by maintaining price stability, including for creating conditions for balanced and sustainable economic growth. Price stability is the main monetary policy goal, which implies steadily low inflation. In order to maintain price stability, BoR implements monetary policy within the inflation targeting regime. The current goal of the BoR's monetary policy is to maintain annual inflation close to 4% on a continuous basis. The inflation target is set for the annual growth rate of consumer prices, that is, the change in prices for goods and services purchased by households over the last 12 months.

Under the inflation targeting regime, the key rate is the main instrument of the BoR's monetary policy. The key rate is the interest rate on main operations carried out by the BoR to regulate the banking sector liquidity. The BoR's Board of Directors makes its key rate decisions on a regular basis eight times a year. After each Board of Directors' key rate meeting a press release on the specifics of and rationale for decision is released and Governor of the BoR holds live press conference. Furthermore, the BoR publishes its medium-term macroeconomic forecast four times a year updated at each of the core key rate meetings, along with press release on the key rate. Since 2021, the forecast was supplemented by projected path of the key rate. Monetary Policy Report is also released after each core meeting.

Key features of the implementation framework

To achieve the primary objective of monetary policy – that is price stability – the BoR sets the operational target of monetary policy - bringing money market overnight rates close to the key rate.

The BoR achieves the operational target by implementing the adopted general approaches to managing the banking sector liquidity and money market rates with the system of monetary policy instruments. The latter consists of reserve requirements, standing facilities and market operations.

Another crucial element of the BoR operational framework is its counterparty policy. To reduce financial and reputational risks the Bank provides liquidity under its monetary policy implementation framework only against qualified collateral (securities included in the Lombard list).

Reserve requirements

Currently depository institutions and infrastructure organizations holding accounts at the BoR are to comply with reserve requirements (RR). This measure serves as a tool to create a stable and sustained demand for central bank account balances and influence the structure of commercial banks' balance sheets.

RR ratios are currently set at 4,75% on ruble-denominated liabilities (1% for banks with a base license which comprise a small share of the banking sector), 8% on FX-denominated liabilities. Differentiated RR ratios are aimed at discouraging the dollarization of banks' balances.

Most banks are eligible for reserve requirement averaging allowing banks to maintain a certain level of deposits at the central bank over the maintenance period (usually within 28-35 days). The averaging mechanism mitigates money market rates volatility by absorbing liquidity shocks due to daily payments.

Standing facilities

Most financial institutions holding account balances at the BoR are eligible for standing facilities. Currently the eligible counterparties include banks and non-bank entities with a credit institution license. The primary objective of standing facilities is to reduce volatility of money market rates by absorbing and providing liquidity at penalty rates. The rates on standing facilities form interest rate corridor. The BoR employs a symmetric rate corridor of 200 bps.

Standing facilities encompass overnight loans (which are an extension of intra-day loans) and a wide range of operations with 1-day maturity: Lombard loans, currency swaps, repos, loans secured by non-marketable assets to provide liquidity, deposit operations to absorb liquidity.

The BoR also provides standing intraday credit facility to assist banks in daily transactions.

Eligible counterparties have access to intraday and overnight operations at all times during the working hours of the Bank of Russia Payment System.

The BoR also provides long term loans secured by non-marketable assets at a higher rate (key rate + 175 bps) which are aimed at improving conditions for conducting main operations, restricting the impact of structural liquidity deficit on maturity of credit institutions' liabilities with a redemption period of 2 to 549 days. As Russian banking sector is currently in liquidity surplus, these operations are not widely used.

Open market operations

Open market operations (OMOs) form a primary set of tools to steer money market rates towards the policy rate.

The main OMOs are 1-week deposit (or repo) auctions held weekly. The direction of an auction (repos to provide liquidity, deposits to absorb funds) depends on the situation with banking liquidity. The maximum allotment amount is determined based on liquidity forecast. The minimum/maximum rate at a repo/deposit auction is equal to the key rate.

OMOs also include "fine-tuning" operations conducted at the discretion of the BoR to prevent excessive interest rate fluctuations. "Fine-tuning" operations can take the form of repo, FX swaps and deposit auctions with a redemption period of 1 to 6 days and the maximum/minimum rate equal to the key rate.

Finally, the BoR employs a number of long-term OMOs that address medium and long-term liquidity needs of the banking sector. Currently under liquidity surplus the BoR issues 3-month coupon bonds which are offered to the credit institutions weekly. The primary objective of bond issuance is to absorb medium-term liquidity surplus.

To provide medium-term liquidity the BoR has in it toolkit 3-month auction loans secured by non-marketable assets. These loans were provided under liquidity deficit however currently these operations are not conducted.

In May 2020, the BoR introduced 1 month and 1 year repo auctions held monthly with funds provided at a small spread to the key policy rate. These operations initially were targeted at reducing the maturity mismatch in banks' balance sheets amid shrinking structural liquidity surplus and decreasing maturities of credit institutions' liabilities.

Institutional setup of monetary policy decisions and operations

Policy decision body, size and composition Bank of Russia Board of Directors, which consists of the Governor of the Bank of Russia and 14 Board members makes decisions on the key rate, other rates, Reserve Requirements, OBR (Bank of Russia bonds).
Monetary Policy Committee, which consists of the Governor of the Bank of Russia and 10 members makes operating framework decisions. 1
Major mandates 2 Maintain price stability, that is, sustainably low inflation.
Decision-making process Consensus 3
Frequency / length of meetings Meetings on the key rate are held eight times a year with four quarterly core meetings and four interim meetings held in-between.
Meetings on other matters are held at discretion
Frequency of announcements Same
Main policy target YoY inflation (CPI) close to 4% 4

Overview of key features

Key policy rate Key rate
maturity (days) 1-7 days
Operating target RUONIA (Ruble Overnight Index Average), ruble unsecured overnight lending rate close to the key rate
maturity (days) 1
Standing facilities Lending (repo, loans, swaps), deposit
Corridor width (bp) 200
Reserve requirements Yes
maintenance period 28/35 days
Main operation 5 RP auctions or deposit auctions
functions Liquidity injection or absorption
maturity (days) Liquidity injection or absorption
regular interval Liquidity injection or absorption
frequency Liquidity injection or absorption
Overall frequency Auctions ~ weekly, Standing Facilities - daily
Discretion left to operational desk No
Key policy signals via
announcement +
keynote tender +
standing facility +
other +

Monetary policy communication

Explicit use of forward guidance No 6
Timing / media of policy announcement The press release on the key rate is published at 01:30 PM Moscow time on the day of the decision. At 03:00 PM Moscow time the Bank of Russia Governor makes a public statement on the decision made.
Policy announcement and documents The press release on the key rate
Explaining policy decisions Press conference by the Bank of Russia Governor plus Monetary Policy Report published on the sixth business day after the decision 7
Dissemination of minutes (timing / media) No
Content of minutes No
Publication of forecasts 8 Inflation dynamics, monetary conditions, economic activity and inflation risks
Publication of projected path of policy rate 9 Yes. Since April 2021, BoR's includes in its published forecast projected policy rate path in the form of ranges for the average key rate for each calendar year covered by the forecast. This path shall be interpreted as the collegial opinion of the BoD on the endogenous path consistent with the macroeconomic conditions of the BoR’s baseline forecast, which shall result in meeting the price stability objective, i.e. to keep annual inflation ‘close to 4% on a continuous basis’. The projected policy path is updated at each of the core key rate meetings of the Board of Directors along with medium-term macroeconomic forecast.

Reserve requirements: ratios and size

Main functions served Liquidity management

Auxiliary function:
macro-prudential purposes
Domestic currency 4.75% on all liabilities for banks with a universal license and on liabilities to non-residents for banks with a base license; 1% for banks with a base license on liabilities to the population and other liabilities.
Foreign currency 8%
Average 5.59%
Required reserves 3547 bn RUB 10
Required reserve as % of GDP 3.32%
Actual reserves 3617.3 bn RUB 11
Actual reserve as % of GDP 3.38%

Main features of reserve requirements

Averaging Yes
Carry-over No
Type Lagged
Maintenance period 28/35 days
end (day) Tue
Calculation period 1 month
end (day) Last day of month
Lag before maintenance 1.5 months
Vault cash Yes 12
restrictions Up to 25% of required reserves on ruble liabilities
Remuneration No
average rate -
marginal rate -
Framework last changed August 2019

Liquidity position and forecasting

Structural Position Surplus
Most volatile factor(s) Government sector flows
Most unpredictable factor(s) Government sector flows
Forecast horizon(s) Daily forecast for the following month, monthly - for up to 3 years
Frequency Weekly
Frequency of revision Weekly for short-term forecasts (daily update if required), eight times a year for medium-term forecast.
Forecast published? Yes - on a weekly basis for the following week and once a year for the following 3 years

Standing facilities: lending / market ceiling

Name Overnight standing facilities
Form Secured loan, repo, swap
Pricing method Key rate plus 100 bp
Maturity O/N
Access limited by/to Eligible collateral, individual caps, central bank counterparty framework
Function(s) 1) Set the ceiling for the overnight money market rates 2) Provide liquidity to the credit institutions that have failed to borrow funds in the money market (lender of last resort)

Standing facilities: deposit / market floor

Name Overnight standing facilities
Form Overnight deposits
Pricing method Key rate minus 100 bp
Maturity O/N
Access limited by/to All licensed credit institutions (need to have a deposit agreement with the BoR)
Function(s) 1) Set the floor for the overnight money market rates 2) Absorb liquidity from the credit institutions that have failed to deposit funds in the money market

Open market operations: repo or reverse repo

Name/Type 13 RP auctions to provide liquidity and deposit auctions to absorb liquidity
Maturity One week
Frequency Weekly
Pricing method American auction with a minimum (maximum) bid rate equal to the key rate
Access limited by/to Eligible collateral, access only to licensed credit institutions that have a general repo agreement with the BoR
Function(s) Providing/absorbing liquidity to steer the money market rates

Open market operations: central bank bills

Name OBRs (Bank of Russia bonds)
Total issuance 900 bn RUB (694 bn RUB of which are in circulation) as of November 1, 2020
Maturity 3 months
Restrictions on possible maturities None
Pricing method American auction with a minimum bid rate equal to the key rate or the key+spread rate
Access limited by/to Only Russian credit institutions
Discretion left to operational desk No

Open market operations: FX swaps

Maturity 1-2 days
Frequency Discretionally 14
Pricing method American auction with a minimum bid rate equal to the key rate
Access limited by/to Russian credit institutions that can participate in repo auctions
Function(s) Provide ruble liquidity when regular marketable collateral (i.e. securities) is scarce

Other significant liquidity management means

Name/Type 15 i) Fine-tuning auctions ii) Long-term loan auctions (currently are not conducted due to the liquidity surplus) iii) Long-term repo auctions iv) Long-term standing facilities v) The emergency liquidity assistance (ELA) mechanism
Form i) REPO and FX swap auctions / deposit auctions ii) Auctions to provide loans secured by non-marketable assets iii) Repo auctions iv) Loans secured by non-marketable assets v) Repo/loans
Frequency i) Occasionally ii) Monthly iii) Monthly iv) Daily v) Occasionally
Maturity i) 1-6 days ii) 3 months iii) One month, one year iv) 2-549 days v) Up to 90 days
Pricing Method i) The minimum (maximum) interest rate on fine-tuning operations to provide (absorb) liquidity equals to the key rate. ii) The minimum rate is the key rate + 25 bp iii) The minimum rate for one-month repo auctions equals the key rate + 10 bp. The minimum rate for one-year repo auctions equals the key rate + 25 bp iv) key rate + 275 bp v) The key rate + 275 bp
Access limited by/to i-ii, iv) Same as for other operations of that type (i.e. repos, loans, deposits) iii) The set of collateral is more narrow when compared to normal repos: ederal government bonds put on the Lombard List and bonds of constituent territories of the Russian Federation and municipalities with the highest credit rating according to the national rating scale v) Wider set of collateral when compared to normal repos, loans
Function(s) i) Prevent excessive fluctuations of money market rates within the interest rate corridor ii) Meet medium-term liquidity needs iii) Decrease the maturity mismatch in banks’ balance sheets amid the shrinking structural liquidity surplus and reduce maturities of credit institutions’ liabilities iv) Improve conditions for conducting main operations, restrict the impact of structural liquidity deficit on maturity of credit institutions’ liabilities v) Provide funds to financially sound credit isntitutions that are experiencing temporary difficulites with liquidity

Settlement systems and intra-day liquidity facilities

Settlement system RTGS
Intra-day liquidity facility Yes
Charge Transactions - Yes, intra-day facility - No
Foreign currency settlement system No
CLS participation by banks No
Other settlement system(s) Yes 16


Standing facilities: List of eligible collateral i) Securities included in the Bank of Russia Lombard List with the initial haircut below 100% ii) Credit claims on real sector enterprises and fiscal authorities (only for loans) iii) FX (USD, EUR) for FX swaps
Standing facilities: Discretion of central bank on collateral 17 Yes. The central bank uses counter-cyclical approach in its collateral framework, adjusting the eligible collateral by expanding (decreasing) its list and changing haircuts depending on the projected situation with banking liquidity. The measures that result in a decrease of eligible collateral are usually announced in advance (3-6 months).
Open market operations: List of eligible collateral Same as 11.1
Open market operations: Discretion of central bank on collateral 18 Same as 11.2

Dissemination of operational information: liquidity forecast

Forecast published? Yes
Channel(s) Designated pages on the Bank of Russia website; official publications (Banking Sector Liquidity and Financial Markets: Facts, Assessments, Comments, Monetary policy report, Monetary Policy Guidelines Report)
Timing i) Tuesdays (day of the conduction of the main operations) for weekly forecasts ii) In the monthly "Banking Sector Liquidity and Financial Markets: Facts, Assessments, Comments" Report and the Monetary Policy Report for forecast till year-end iii) In the annual Monetary Policy Guidelines Report for the next three years

Dissemination of operational information: open market operations

Volume and price published? Yes
Channel(s) Bank of Russia website
Timing Same day

Dissemination of operational information: standing facilities

Lending facility usage: Channel(s) Bank of Russia website
Lending facility usage: Timing Next working day
Deposit facility usage: Channel(s) Bank of Russia website
Deposit facility usage: Timing Next working day

Other information dissemination

Type i) Required Reserves ii) Overnight money market interest rates iii) Bank of Russia bonds (OBRs) iv) Bank of Russia claims on Credit Institutions under Special Refinancing Facilities
Channel(s) Bank of Russia website
Timing i) In accordance with corresponding maintenance periods (28/35 days) ii) Daily iii) Monthly

1 The meeting on the key rate is attended by invited participants who do not take part in the voting process: Director of the Monetary Policy Department, Director of the Public Relations Department, representatives of the Ministry of Economic Development and the Ministry of Finance of the Russian Federation

2 Describe as well the legal status of the mandate and involvement of government

3 In the course of the meeting, the Board of Directors seeks to achieve a consensus on the most critical aspects of the discussion and on the key rate decision. Among other things, this is crucial, since the Bank of Russia sticks to a ‘single voice’ policy providing the public with a single and consistent opinion from the Bank of Russia.

4 The wording ‘close to 4%’ implies that inflation may slightly fluctuate around the target.

5 RP = reversed purchase (repo, inject liquidity), RS=RRP=reversed sale (reverse repo, absorb liquidity), RT=reversed transaction (repo or reverse repo).

6 In its communication the BoR may include a qualitative indication of the balance of probabilities for the key rate change at “upcoming meetings” (which is typically interpreted as the next 2-3 meetings). However, this does not constitute a forward guidance, as it is not directly conditioned on any economic indicators. The BoR consistently states that it reserves full discretion of action at a given meeting regardless of the signal communicated at the previous meeting, i.e. the validity of the signal gradually depreciates as time passes, situation evolves and more data becomes available. In this sense, this practice shall NOT be interpreted as a forward guidance.

7 The Bank of Russia provides its explanations for the key rate decision and the key aspects of the pursued monetary policy not only on the day of the decision, but also throughout the entire period until the next key rate decision. The Bank of Russia continues its communication with the public, journalists, and representatives of the authorities, businesses, and the expert community. The most intensive stage takes place during the two weeks following the key rate decision.

8 For instance, economic and inflation forecasts related to policy decision.

9 If applicable, describe the publication of any fan-charts or uncertainty bands around the forecasts/projections.

10 As of January 2021

11 As of January 2021

12 Vault cash is only in rubles

13 RP=Reversed purchase (“repo”), RS=RRP=Reversed Sales (“reverse repo”), RT=Reversed transaction (RP or RRP).

14 Only in combination with repo fine-tuning operations, in practice have never been carried out

15 OT = Outright Transaction, DB = Direct Borrowing, DL = Direct Lending.

16 Faster payments system

17 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.

18 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.