Subject The article discusses and substantiates the authority of the Central Bank of Russia and points out drawbacks of such rationale. Objectives The research provides the rationale for expanding the authority of the Central Bank of Russia not only as a creditor, but also as a borrower of last resort. Methods The research involves the historical-logic and functional methods, methods of comparative economic analysis. Results I found aspects to separate the demand for money as a means of savings and means of payment for productive resources and other capital assets. The article demonstrates that Keynes's liquidity preference theory, as put in The General Theory of Employment, Interest and Money, highlights the main guidelines for such aspects and ways to improve the existing monetary system as a central banking mechanism with fractional reserve of deposits. Conclusions and Relevance As a result of the analysis, I identify specifics in the demand and supply in the monetary market and potential opportunities of the Central Bank of Russia to maintain the policy of differentiated interest rates and subsequently ensure the safety of monetary assets. The banking community has to admit that specific banking risks associated with the identification of rather reliable borrowers cannot be transferred to other financial institutions without affecting the quality of such risks management. The findings can be used to discuss and choose options of the monetary policy.
Keywords: money demand, money supply, central bank, liquidity, maintenance costs
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