Viktor Gerashchenko, governor of Russia's bank who was dubbed ‘the worst central banker in the world'

Yahoo

14-05-2025

Viktor Gerashchenko, who has died aged 87, was a gruff Soviet-era central banker who in 1992 was appointed to head the Russian central bank under the country's first post-Soviet president, Boris Yeltsin; however, his insistence on recklessly printing roubles, and the cheap credits he handed out to weak Russian banks, fuelled hyperinflation in which millions lost their savings, earning him the sobriquet 'the worst central banker in the world' from the Economist magazine.
Gerashchenko's support came mainly from the old nomenklatura who saw him as holding the line against reformers in the Yeltsin administration. It was all very well, Gerashchenko remarked, for reformers to fall back on 'hackneyed quotations from Western textbooks on macroeconomics,' and he denied any link between the bank's overheated printing presses and rampaging inflation, which he claimed was caused by insufficient production.
Effectively confirming administration charges that he was running his own economic and social policy, he observed that the bank could hold inflation to nothing, but only at the cost of 'unrestrained unemployment and the absence of social safeguards for the jobless'. Therefore, it chose to print more money.
Gerashchenko was fired in October 1994 after the rouble lost about 30 percent of its value in one day – 'Black Tuesday'. While a few pundits remained hopeful that Russia might still build the foundations of a market-based democratic order, the economy continued to deteriorate under Gerashchenko's three successors, and in 1998, when the country defaulted on its debt, Gerashchenko was called back.
Over the next four years, helped by a huge devaluation of the rouble and high oil prices, he was credited with presiding over an economic recovery in which the rouble stabilised againt the dollar, Russia ran a large trade surplus and inflation was kept in check. But the central bank remained unreformed, remaining a byword for pedantic but ineffective regulation and turning a blind eye to the behaviour of the well-connected, while running a murky web of foreign subsidiaries.
In March 2002, with Russia now under President Vladimir Putin, Gerashchenko resigned from the bank. In 2004 he became chairman of the board of the oil company Yukos, which had been acquired from the state by the Russian oligarch Mikhail Khodorkovsky in the mid-1990s.
By the time Gerashchenko arrived, Khodorkovsky was awaiting trial on charges of fraud, though his main transgressions appear to have been his outspoken criticism of the Putin administration and his political ambitions, 'crimes' which saw him imprisoned for a decade and eventually forced into exile.
Gerashchenko claimed to have been appointed as 'a go-between for the Kremlin and Khodorkovsky', but during his time as Yukos chairman (2004-07), most of the company's assets were seized and transferred for a fraction of their value to state-owned oil companies. 'The f---ers nicked it,' he said.
Yet Gerashchenko, widely disliked as a Communist-era apparatchik, offered little political threat to Putin. In 2003 he was a co-founder of Rodina ('Motherland') party, a nationalist coalition seen as pro-Kremlin, and was elected to the state Duma. In 2004 the Kremlin was said to have asked him to play the part of challenger to Putin in the presidential elections of that year. Ultimately, however, he was refused registration by the Central Election Commission owing to a technicality.
Viktor Vladimirovich Gerashchenko was born in Leningrad on December 21 1937. His father was a leading banker who became deputy chairman of the State Bank, and thanks to his father's connections Viktor rose rapidly in the Soviet banking system.
At the age of 28 he became director of the London-based Moscow Narodny Bank the first Soviet foreign bank. In 1982, he moved to work in the Vneshtorgbank, responsible for Soviet foreign trade and in 1989 he became the last chairman of the State Bank of the USSR. According to a US Congressional report, he may have been involved in funding of espionage and terrorist operations.
Viktor Gerashchenko, born December 21 1937, died May 11 2025
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