ABSTRACT
This chapter deals with a brief discussion of the background to the establishment of the Central Bank of Russia. The Central Bank of Russia was created during one of the most tumultuous periods in the modern history of Russia. Once the government decides to engage in macroeconomic policy rather than command-administrative microeconomic policy, the credibility of the monetary authority becomes paramount. The type of monetary policy the Central Bank of Russia conducts at present seems dependent upon the political make-up of the Russian Duma. The Russian central bank is institutionally a separate entity, and this separation is guaranteed in its fundamental legislation. The primary sources of inflation in Russia seem to be both seigniorage and credit extension to commercial banks by the Russian central bank. This is due not only to a lack of other revenue sources, given the government's current inability to bond-finance government debt, but also to the Central Bank of Russia's credit policies.
