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. Last Updated: 07/27/2016

EDITORIAL: Frightening Letters Need Explanation

The letters published in this edition of The Moscow Times signed by Finance Minister Mikhail Zadornov, if authentic, provide a chilling insight into the depth of the financial crisis that faced Russia in mid-July.

According to the letters, the Finance Ministry received a nasty surprise when the Central Bank froze its main accounts and withdrew some 8.7 billion rubles of government money in repayment for short-term loans.

The Finance Ministry had expected to have to repay the loans four days later, but the Central Bank had unilaterally decided to reduce the settlement period for the loans.

The Central Bank's actions, according to the letters, meant that the Finance Ministry had no funds to pay workers or make interest repayments on government bonds.

If the letters are authentic, this suggests a frightening lack of coordination between two arms of government that are supposed to be working together.

The dispute between the Central Bank and the Finance Ministry could have undermined confidence at a time when Russia was desperately trying to convince the International Monetary Fund and other investors to trust in Russia's financial system.

Unfortunately, the Russian government has not given a convincing account of what happened.

The Moscow Times was unable to obtain from the Central Bank or the Finance Ministry a denial or confirmation of the authenticity of the letters or of the specific facts contained in them.

The Russian daily newspaper Nezavisimaya Gazeta outlined a similar set of circumstances and referred to one of the letters in a highly polemical article published Friday.

The Central Bank and the Finance Ministry condemned that article and threatened to sue. But they also issued a bizarrely qualified denial: The article was inaccurate but, officials admitted, it was true that the Central Bank and the Finance Ministry had some differences during the financial crisis in July. These have now been settled.

Vague admissions by the Finance Ministry and the Central Bank of significant differences during a national financial emergency are not exactly reassuring. It would be nice to know what they were and how they have been resolved.

A statutory guarantee of independence has done a great deal to enhance the reputation of Russia's Central Bank. But this independence has also occasionally put it at odds with the government of the day.

So long as the letters remain unchallenged, it looks like the Central Bank and the Finance Ministry were at daggers drawn at the worst time. A fuller explanation would do a lot to build confidence in Russia's policy.