2. The impact of the ruble's steep fall on Russia's economic development

The sharp fall of the ruble within a short term was a disaster for Russian society. From the social level, the vicious depreciation caused widespread panic. Once in a while, people piled into department stores and scare buying swept across the nation. From the political level, the fall of the ruble made the struggle among Russia's various domestic political forces and factions fiercer and sharper. Abusive words could be heard in the federal parliament. Vladimir Zhirinovsky, State Duma member, leader of the Liberal Democratic Party and well-established opposition leader, publicly demanded the government to step down. MPs such as vice chairman of the Fair Russia party Mikhail Yemelyanov criticized Central Bank governor Elvira Nabiullina's incompetence and urged her to resign. From an economic level, the negative impacts of the ruble's vicious depreciation and part of Russian authorities' countermeasures were more alarming.

2.1 Inflationary pressure increased

Since the later period of the Soviet Union, the Russian economy has entered an era of historically high inflation. The height and length was unprecedented in contemporary world economy. Since the country's transformation till now, tackling inflation has been one of the thorniest issues for the government. It has not achieved its goals in most fiscal years. After more than two decades' arduous efforts, it had managed to put the inflation rate within 6 percent. However with the edge-cutting fall of the ruble, the situation became tougher, which made it more difficult to cope with. Currently, more than 80 percent of civilian commodities in the market rely on exports. The sharp depreciation of the ruble increased the cost of import, leading to the price hike of goods, which brewed large-scale imported inflation.

2.2 The modernization process of the Russian economy was hindered

Modernization has been the core economic work for Russia currently and in the near future. The Russian government hoped to make up for the huge losses over the past 20 years through this process and narrow the gap with developed countries as soon as possible. Modernization needs a stable financial environment, or a lot of work could not be carried out. The vicious depreciation of the ruble severely damaged the financial environment, which not only added difficulties to attract foreign investment, but also increased the costs of bringing in advanced technology and equipment. It obviously did no good to the economic modernization process.

2.3 High interest rate hindered economic development

Since 2013, especially in recent quarters, Russia's economic prospect index kept declining. In order to boost economic growth, expanding investment was undoubtedly a necessary option. However, the Central Bank chose the opposite way by raising key interest rates with the aim of curbing inflation and stabilizing the exchange rate of the ruble. Nonetheless, it only had adverse effects. The financing and investment costs and business costs were largely lifted. The banking sector suffered heavier blows. For Russia which was already in a shortage of fund, it did nothing but hindered its economic development.

2.4 “Dollarization” may re-emerge

Once upon a time, due to instability of the country's legal currency,“dollarization” in the Russian market was extremely serious. After years of the Russian government's tough handling, the situation turned for the better. Therefore, the Putin administration had been indulged in elaborating on its financial achievement of “de-dollarization.” The steep fall of the ruble dealt a heavy blow to the public's confidence which just saw a sign of regaining.“Dollarization” is likely to re-emerge, which will render Russian government's long-term efforts of “de-dollarization” fruitless.

2.5 The ruble's internationalization got severely impeded

The internationalization of the ruble has been one of the economic objectives Russia has been chasing after for year. It not only matters to Russia's international image and status, but will also directly affect the Russia-led regional integration process in the post-Soviet sphere. The ruble crisis this time has obviously tarnished the reputation of the ruble, severely hindering its process of regionalization and internationalization.

The large-scale depreciation of the ruble had a complicated impact on the Russian economy. Besides the abovementioned negative effects, there were some positive factors. Theoretically, the depreciation restrained imports to a large extent, which provided favorable opportunities for the revival of Russia's own industries. In 1998, Russia experienced a serious financial crisis and the ruble met with similar devaluation. While it brought disastrous outcomes on multilateral fronts to Russia, it had certain positive impacts. After the ruble sharply fell and import was restrained, the long-suppressed national industries gained a chance of breath. Some domestic commodities regained part of the market and expanded exports, which set a certain foundation for the revival of the national economy thereafter. Therefore, some sectors and industries would benefit from this ruble crisis, the most prominent one of which would be the food-processing industry. This sector has been one of the few sustainably developing sectors in the Russian economy in the past two decades.

Facing the continuous depreciation of the ruble, Russian Central Bank Governor Elvira Nabiullina once said that the ruble depreciation indicated that the economy should turn to domestic production which could serve as an opportunity to develop import substitution industries. She pointed out that the sluggish ruble exchange rate signaled that the Russian economy should adapt to a new environment, “the sluggish ruble exchange rate provided Russian producers an opportunity and that the task is to make use of these opportunities as driving forces for domestic production and employment.” She also noted that the Russians should learn to survive in new environment and count on domestic fund and projects to a large extent, so as to seek replacement for imports. Therefore, Russia's financial officials have fully realized the importance of and dedicated to making use of the opportunity of the ruble depreciation to develop national industries. All in all, the ruble crisis has just passed, but its impact is still continuing and evolving. It remains to be seen whether the Russian government can turn the crisis into a chance to promote national industries, to what extent the Russian economy can find replacement for imports and what changes will take place in Russian society.