BIS central bankers’ speeches  3  But opening up the capital account amidst a slowing economy, a still developing domestic financial system, and a debt overhang, is no easy task. China has also made progress in reforming its exchange rate framework. •  Decoupling the RMB from the US Dollar last year – while it caused considerable anxiety in the markets – was an important and necessary step towards a more market-based exchange rate. •  The shift to a trade-weighted index for evaluating the exchange rate of the RMB will, however, take some time to gain credibility among market participants. The most decisive yet most difficult piece in the overall reform programme is the reform of state-owned enterprises, or SOEs. The SOEs have been generating lower rates of returns on investment compared to the non-state sector, and are a drag on China’s overall measured productivity performance. •  An SOE restructuring blueprint was announced last year, with the aim of improving competitiveness and efficiency but without outright privatisation, for example by consolidating similar SOEs or promoting “mixed ownership”. •  This is a strong step in the right direction, but the Third Plenum’s vision of a marketbased economy can only be realised if SOEs are subject to competitive forces in all aspects of their operations. China in transition: near-term effects on Asia So, what does this all mean for the global economy, and Asia in particular?
Elvira Nabiullina: Review of Russia’s economic and financial developments in 2015 Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the plenary meeting of the State Duma of the Russian Federation, Moscow, 14 June 2016. *  *  *  Good afternoon, dear colleagues! Today we present the latest Annual Report of the Bank of Russia to the 6th State Duma. First of all, I would like to thank the deputies for the legislative efforts, which we took together to both develop the financial system and protect the rights of financial services consumers, and for the efficient cooperation with the Bank of Russia. As many as 130 laws affecting the financial sector have been adopted over these three years. Now, let’s look at the Bank of Russia’s performance in 2015. A sharp deterioration in external environment in late 2014 – early 2015 (oil price drop and sanctions) triggered turbulence in the external market and followed by a surge in inflation. These developments required measures to stabilise the situation and help the economy adjust to the worsened conditions. The first one is a transition to a floating exchange rate of the ruble. This is a pivotal systemic measure. Though this transition was not a smooth one, I would like to stress, should we have failed to take this step, according to our estimates, the economic downturn could have been deeper. Now the floating exchange rate works as an embedded economic stabiliser that mitigates the external shocks.