Third High-Level Eurosystem – Bank of Russia seminar

The Eurosystem – comprising the European Central Bank and the national central banks of the euro area – and the Bank of Russia held their third joint seminar on 11 and 12 October 2006 in Dresden, Germany. The seminar, hosted by the Deutsche Bundesbank, was attended by governors and high-level representatives of the ECB, the Bank of Russia and the 12 national central banks of the euro area. Seminar participants also included senior officials of the European Commission and the Presidency of the European Union, as well as the Administration of the President, the Office of the Government, the Parliament and Federal Ministries of the Russian Federation.

The purpose of the seminar was to strengthen dialogue and enhance relations between the Bank of Russia and the Eurosystem, which have intensified over recent years. Seminar participants exchanged views on the current challenges for monetary policy in Russia as well as the role of fiscal rules in the euro area and Russia.

Participants were welcomed by Axel Weber, President of the Deutsche Bundesbank, who emphasized the need for further development of contacts between the Bank of Russia and the Eurosystem. In his keynote speech on the importance of fiscal rules for monetary policy President Weber noted that rigorous implementation of prudent fiscal rules in line with the Stability and Growth Pact is needed to supplement stability-oriented monetary policy in the euro area.

President of the ECB Jean-Claude Trichet in his introductory remarks highlighted the increasingly important role played by Russia as a strategic partner for the euro area, particularly in the energy sector. He stressed that very important technical cooperation has been established between the Bank of Russia and the Eurosystem in banking supervision over recent years. President Trichet concluded that strong GDP growth in Russia has a positive impact on the euro area.

Regarding the current challenges facing monetary policy in the Russian Federation Sergey Ignatiev, Chairman of the Bank of Russia, stated that the main results of Russia’s economic development over recent years demonstrate that the pursued monetary and exchange rate policies help to maintain macroeconomic and financial stability. The principal goals of the Bank of Russia’s monetary policy are the gradual reduction of inflation and ensuring stability of the national currency. The Bank of Russia believes that its long-term target is to reduce drastically its involvement in the rate-setting process on the foreign exchange market. The achievement of these aims is the major contribution of monetary policy to sustainable economic growth, further strengthening of banking sector, positive expectations and rising living standards in the Russian Federation.

Seminar participants also considered long-term growth prospects for the Russian economy and agreed that Russia currently enjoys strong growth momentum. However, maintaining such high growth rates over the longer term was seen by some discussants as a challenge.

The seminar demonstrated the benefits of continued dialogue between the Eurosystem and the Bank of Russia. Participants agreed to augment cooperation, including organisation of similar gatherings on a regular basis, thereby complementing bilateral relations between the national central banks of the euro area and the Bank of Russia.