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Role of Monetary Policies in the 1998 Russian Financial Crisis

Introduction

The financial crisis in Russia in 1998 was part of the financial crisis global. The Crisis began with the collapse of the banking system in the Czech Republic in the spring of 1997, in the autumn of that year he covered Malaysia and Thailand. In early 1998, the crisis spread to Indonesia, South Korea and Japan. In August 1998, the crisis reached Russia and then moved to Brazil and Argentina. The peculiarity of the global financial crisis of 1997-1998, lies in the fact that this is the first crisis that has the hit most of the countries with emerging markets, which includes Russia. The crisis has a significant impact had on the global system as a financial whole, putting the question of the necessity of reform, including reform of international Financial Institutions (IFIs).

The Financial Meltdown reflects Both the Weakness of the Real sector of Economy, Lack of Coordination of fiscal, Monetary and Banking Policies, Although the negative role of steadily deteriorating external Environment in the Financial Markets Has Played an Important role. (Kuvalin.2009)

The Russian Federation is a type of emerging market that was the reason for high its vulnerability in the global financial crisis. The Study of the causes and consequences of the crisis in 1998 is relevant to the current in Russia, as well as around the world, the situation in view of the crisis of 2008-2009 depending on the socio-political events on the course of economic reform and transformation.

Discussions

In Russia, the crisis has particularly acute form because of the lack of significant structural reforms in key sectors of the economy, heavily dependent on inflows of short-term foreign capital, the fall in oil prices as the main article of Russian exports, low levels of tax collection.

Russia on the Verge of Crisis

The situation changed dramatically in early 1998. The world price of crude oil dropped to 10-11 dollars per barrel. It was promoted by the financial crisis erupted in Southeast Asia, which reduced demand for oil, as well as the increased supply resulting from increased oil production and exports in many countries around the world. For Russia, the collapse in oil prices in the situation dramatically increased the national debt was a direct cause of the financial crisis. In a short time, oil companies and the budget lost about $ 1 billion. Broke and auction sale of 75 per cent stake in state oil company "Rosneft", which should give the Russian budget of about $ 2.5 billion. The crisis in the global oil market has become the immediate cause of the next round of financial crisis in Russia. Within a short period of shares of oil and other major energy companies, including the "Gazprom" and "UES of Russia" have fallen by 30-40 percent. Only one day "Black Wednesday" May 27 Course of Russian stocks fell by 11 percent. Financial losses totaled about $ 15 billion. Worsened the situation in the government bond market, began the flight ...