Change in Risks for Global Economy Signals 'Hard Case' Scenario, Russian Central Bank Says

"In recent months, the situation and the balance of risks for the global economy have shifted somewhat towards a hard case scenario, if not toward a full-scale global crisis," Nabiullina said, speaking at a joint meeting of the State Duma committees on the state monetary policy for 2023 and the period 2024-2025.

She also noted that the impact of sanctions on the Russian and world economy should not be downplayed, because the consequences will be impossible to ignore.

"Sanctions are very powerful, and their impact on both the Russian and the world economy should not be downplayed; it will be impossible to isolate oneself from their influence," Nabiullina added.

Sanctions are changing the geography and demand for Russian imports and exports, breaking off old foreign economic ties and requiring the emergence of new ones, Nabiullina said, adding that the economy is going through a period of structural transformation.

At the same time, the sanctions pressure is increasing and also affecting Russia's partners in other countries, according to the her.

Russia's Central Bank Chairperson Elvira Nabiullina

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Nabiullina stressed that at the moment, the central bank sees no prerequisites for the liberalization of the control over the movements of capital.

"After a significant part of our foreign exchange reserves was frozen, we could not intervene in order to smooth out foreign exchange market fluctuations and volatility, so we had to introduce a wide range of control measures over the movement of capital," she said.

The head of the Russian Central Bank added that the control measures are begging to soften as the situation stabilizes, however the bank does not see any prerequisites for further liberalization of currency restrictions at the moment.

The US, Britain, the EU and their allies have imposed several packages of sanctions on Russia since the start of the military operation in Ukraine on February 24. The restrictions have resulted in supply chain disruptions across the globe, exacerbating energy problems. It has led to spiking fuel and food prices across the EU, as well as record-high inflation and a soaring cost of living.