The Central Bank described the scenario of the global financial crisis

The Bank of Russia included among the alternative scenarios the possibility of a global financial crisis in 2023, "comparable in scale to the crisis of 2008-2009." it is considered in the draft Monetary Policy Guidelines (MPT) until 2024 published on September 2. According to the Central Bank, this will happen if the rapid and significant tightening of monetary policy in the United States is superimposed on the bursting of bubbles in asset markets.

The Bank of Russia traditionally presented several macroeconomic scenarios in the draft of the main directions of monetary policy - a basic one and three alternative ones. But if last year the worst-case scenario was “risk” and it assumed a re-growth in the incidence of CORONAVIRUS in the world and a number of other shocks (increased trade contradictions, geopolitical tensions, debt problems in individual countries), now the Central Bank has warned that imbalances are accumulating in the global economy , which even under conditions of post-COVID recovery can lead to a systemic crisis.

“If sentiment in the financial markets is sufficiently volatile in 2022, and the observed developments in the financial markets turn out to be bubbles, then a rapid and significant tightening of US monetary policy could lead to increased investor concern about the prospects for return on invested funds. As a result, 2023 may start with massive sales of risky assets in the financial market and exacerbation of debt problems in emerging market countries, especially those that have accumulated significant foreign currency debt,” the Central Bank describes the crisis scenario (.pdf).

Where bubbles can burst

The Bank of Russia does not indicate in which specific assets bubbles can form and burst. However, he draws attention to a noticeable increase in the “speculative” segment of corporate debt (earlier, the International Monetary Fund indicated that the yield spreads of global investment-grade instruments and less reliable corporate securities narrowed to the smallest values ​​since 2009) and the overall increase in the debt burden of the global economy. In addition, the financial crisis scenario assumes that the average oil price will drop to $40 per barrel in 2023 - from over $70 now.