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Changes in Russia's M2-to-GDP ratio today: Possibilities and implications

Vol. 25, Iss. 8, AUGUST 2019

Received: 10 June 2019

Received in revised form: 3 July 2019

Accepted: 17 July 2019

Available online: 30 August 2019

Subject Heading: MONETARY ACCOMMODATION

JEL Classification: E40, E47, E50, E52, E58, O42

Pages: 1806–1820

https://doi.org/10.24891/fc.25.8.1806

Smirnov V.V. I.N. Ulianov Chuvash State University (ChuvSU), Cheboksary, Chuvash Republic, Russian Federation
v2v3s4@mail.ru

https://orcid.org/0000-0002-6198-3157

Mulendeeva A.V. I.N. Ulianov Chuvash State University (ChuvSU), Cheboksary, Chuvash Republic, Russian Federation
alena-mulendeeva@yandex.ru

https://orcid.org/0000-0002-9852-9804

Subject The article discusses monetization and changes in the M2-to-GDP ratio of the Russian economy.
Objectives The research analyzes whether Russia's M2-to-GDP ratio may change and what implications it may have for the economy.
Methods The study involves statistical, comparative and logic methods of analysis.
Results We revealed why the economic growth slowed down in emerging economies and globally. The article shows the existing role of money, its impact on the economy and society. We found that the growth rate of GDP in USD, RUB, GDP deflator and M2 money supply got stable within 4 up to 12 percent. Some changes in monetization stem from the RUB volatility, which is regulated through the fiscal rule. Growth rates of RUB lag behind those of foreign currency purchased, etc.
Conclusions and Relevance Analyzing possibilities and implications of changes in Russia's M2-to-GDP ratio, we discover that the fiscal rule is critical, reducing the volatility of the RUB exchange rate and inflation rate and contributing to the replenishment of international reserves. With a growth in the purchase of foreign currency keeping sustainable pace, the stabilization of the Russian Ruble necessitated to issue more federal loan bond with the coupon yield above the key interest rate and raise the rate of statutory banking reserves, thus affecting the growth rate in corporate lending. The findings can prove useful to shape the balanced and concerted triangle of monetary, fiscal and business relations in order to drive the economic growth in Russia.

Keywords: opportunities, changes, ruble exchange rate, consequence, growth rate

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