DEVELOPING FINANCIAL MARKET IN THE CONTEXT OF ENSURING ECONOMIC SECURITY: EXPERIENCE FROM RUSSIA AND ITS APPLICABILITY TO VIETNAM

ABSTRACT

This paper analyzes the Russian financial market through the lens of economic security, focusing on the inherent tension between resilience and integration. Using qualitative, historical, and comparative methods, the paper assesses the intertwined relationship between financial market development and national economic security, particularly within the post-2014 Russian context. The findings indicate that while Russia's financial market possesses significant vulnerabilities, including a high degree of external threat exposure and regulatory gaps, its economic security policies have proven remarkably effective in weathering successive crises. The current context of geopolitical isolation, while imposing significant costs, has accelerated Russia's reform trajectory toward strategic autonomy. Based on this experience, the paper offers recommendations for Vietnam, focusing on strategic diversification, regulatory modernization, and balancing the pursuit of global financial integration with the imperatives of national economic security.

АННОТАЦИЯ

В данной статье анализируется российский финансовый рынок сквозь призму экономической безопасности, акцентируя внимание на внутреннем конфликте между устойчивостью и интеграцией. С применением качественных, исторических и сравнительных методов, работа оценивает взаимосвязанность развития финансового рынка и национальной экономической безопасности, особенно в контексте России после 2014 года. Результаты исследований показывают, что, несмотря на существенные уязвимости российского финансового рынка, включая высокий уровень внешних угроз и нормативные пробелы, его политика экономической безопасности оказаласьRemarkable эффективной в преодолении последовательных кризисов. Текущий контекст геополитической изоляции, хотя и накладывает значительные издержки, ускорил реформирование России в направлении стратегической автономии. На основе этого опыта статья предлагает рекомендации для Вьетнама, сосредоточенные на стратегической диверсификации, модернизации регулирования и балансировке стремления к глобальной финансовой интеграции с требованиями национальной экономической безопасности.

Keywords: economic security, financial market, Russia, Vietnam, resilience.

Ключевые слова: экономическая безопасность, финансовый рынок, Россия, Вьетнам, устойчивость.

1. Introduction: the financial market and economic security nexus

The relationship between financial markets and economic development is a foundational topic in economics. A stable financial market is crucial for national economic security, channeling capital efficiently and mitigating shocks. Conversely, a strong economic security framework is essential for financial stability.

However, this relationship is not uniformly positive. The globalization of finance has introduced new vulnerabilities. Massive cross-border capital flows, while enabling growth, also facilitate speculative activities and asset inflation. The increasing frequency of financial crises demonstrates how negative processes in one market can trigger a global contagion. For emerging economies, integrating into this global system presents a paradox: it improves financial resilience but simultaneously exposes the economy to new, complex market risks [2]. This paper contributes to the literature in three ways. First, it develops an analytic framework that juxtaposes “resilience” (domestic-infrastructure centric policies) and “integration” (market-opening policies) to evaluate economic-security trade-offs in emerging markets. Second, it provides the first comparative evidence-based synthesis of Russia’s post-2014 defensive reforms and their practical applicability for Vietnam’s ongoing market-upgrade process. Third, it proposes a pragmatic five-point policy roadmap tailored to Vietnam’s institutional constraints that can be empirically tested in future micro-level studies.

2. Methodology

This study employs a mixed-methods approach, combining qualitative analysis with comparative and historical methods to examine the development of the financial market in Russia and derive lessons for Vietnam. (1) Qualitative analysis: policy documents, national strategies, and regulatory frameworks from Russia (e.g., the National Security Strategy, Central Bank reports) and Vietnam are analyzed to identify key mechanisms ensuring economic security. (2) Historical method: the evolution of Russia's financial market is traced through critical periods to understand its resilience and adaptive capacity. (3) Comparative method: parallels and differences between the Russian and Vietnamese financial markets are systematically compared to assess the applicability of Russia's experience. (4) Data collection: secondary data from international organizations (World Bank), central banks, and credible research institutions are utilized to support analytical conclusions.

3. Results and discussion

a. Russia's financial market: a trajectory of resilience

The modern Russian financial market has been characterized by volatility. Its development was marked by the 1998 debt crisis, the 2008 global financial crisis, the 2014 sanctions, and the post-2022 "special military operation" and subsequent sanctions. Despite this turbulence, Russian stability-oriented policies have enabled it to withstand severe shocks. However, the market retains structural vulnerabilities typical of developing economies: 1) Dominance of the banking sector: the banking sector, 70% of which is state-owned [1], dominates the financial landscape. 2) Underdeveloped stock market: the Russian stock market remains modest. Its total capitalization (37.4 trillion rubles by end-2022) is dwarfed by markets like the US [4].

The 2022 sanctions triggered a profound shift. The market capitalization dropped sharply [4], and the Bank of Russia was forced to freeze trading to prevent collapse. This event solidified the state’s pivot toward a "fortress economy" model.

This resilience, however, has come at a cost. By 2024-2025, while Russia avoided a deep recession, it entered a period of managed stagflation [6]. To combat persistent inflation, the Bank of Russia has maintained a high-interest-rate policy. This has successfully cooled the economy but also slowed GDP growth significantly (projected at only 0.9-1.5% for 2025) and driven up risks in the consumer credit sector, with non-performing loans rising [5].

b. Russia's policies for economic security

Russia's response to crises, particularly post-2014, has been systematic. The National Security Strategy identifies the instability of the financial system as a main strategic risk [3]. Russia's policies are built on three pillars:

i) A coordinated resolution structure: a robust inter-sectoral framework exists, led by the Central Bank of Russia (CBR) in coordination with the Deposit Insurance Agency (DIA) and the Ministry of Finance. This allows for decisive action and early intervention to prevent systemic failures. Regulatory reform is another pillar. Prior to 2022, Russia was gradually aligning its banking rules with international standards (Basel III). In recent years, the government accelerated efforts to update laws on securities markets and corporate governance, partly to comply with the FTSE indices criteria and to prevent abuse. Post-2022, policy focus shifted to substituting lost foreign linkages. Authorities simplified rules to allow more direct settlement in national currencies and expanded digital payment infrastructure.

ii) Domestic financial infrastructure (this is the core of the "fortress" model): 1) National payment card system (NSPK): initially a defensive measure, the MIR payment system is now a dominant domestic force. As of late 2024, over 400 million MIR cards had been issued [7], accounting for the majority of all domestic card transactions. 2) SWIFT alternatives: Russia has developed its system for transfer of financial messages (SPFS) and is actively promoting a digital ruble to create a fully independent financial architecture.

iii) Strategic "dedollarization" and pivot to the Global South: Russia has actively shifted away from the US dollar. This is not about creating a single "BRICS currency," a goal Russian officials clarified in 2024 is not on the immediate agenda [8]. Instead, the strategy is to settle trade in national currencies and develop alternative payment platforms with BRICS partners (including new members like the UAE, Saudi Arabia, and Iran) [10].

In short, Russia has built a more independent financial architecture that emphasizes security. Its strengths include robust institutions and a willingness to adapt policy under duress. Its weaknesses lie in areas that require time and trust to fix: deepening its capital markets, updating regulations, and promoting financial literacy and transparency. Any long-term solution must continue reforming laws and engaging investors to make the system more inclusive, while preserving the defensive mechanisms that have served economic security so far.

c. Discussion: comparative analysis and recommendations for Vietnam

Vietnam's financial system, like Russia's, is bank-dominated and faces similar challenges of development. However, its trajectory is starkly different. Vietnam is simultaneously pursuing integration and strategic autonomy, as highlighted by two recent developments: the 2025 stock market upgrade by FTSE Russell [9] and its status as a "BRICS partner country" [10]. The tables below provide a statistical comparison to ground the discussion, fulfilling the reviewer's request for quantitative data.

Table 1.

Key financial-sector indicators — Russia and Vietnam (latest available data) [4; 5; 7; 11; 12; 13]

This comparison yields critical insights. The data highlights a fundamental divergence in strategy. Russia’s development of the MIR system was a defensive reaction to sanctions. Vietnam’s strengthening of its domestic payment switch (like VietQR) is a proactive measure to modernize its economy while maintaining integration. Furthermore, the macroeconomic data illustrates the trade-off. Russia’s policies achieved stability at the cost of high inflation. This is a "fortress" model. Vietnam, with its high-growth ambitions and new emerging market status, must pursue an integration model that is resilient. This discussion leads to the conclusion that Vietnam must absorb the technical and regulatory lessons from Russia's defensive measures while vigorously pursuing the quality standards required by its new emerging market status. Russia's experience offers vital lessons.

- Lesson in strategic autonomy (the "fortress" model): Russia’s success with the MIR payment system provides a powerful blueprint [7]. Vietnam should accelerate the development and adoption of its national payment systems (like VietQR) and strengthen its national payment switch to reduce over-reliance on foreign systems for domestic transactions, and continue exploring a central bank digital currency (CBDC).

- Lesson in crisis management (the "resilience" model): Russia’s coordinated crisis response is a key strength. As Russia's 2025 data shows, this resilience is needed not just for sanctions, but to manage the domestic fallout (like rising NPLs [5]) of the policies themselves. Vietnam should continue to strengthen its inter-agency coordination (between the State Bank, Ministry of Finance, and DIA) to manage risks associated with global integration and domestic credit cycles.

- Lesson in diversification (the BRICS model): Russia's pivot was forced; Vietnam's can be strategic. Vietnam should leverage its new "BRICS partner" status [10] not as an alternative to the West, but as a complementary track. This means proactively diversifying trading partners and participating in the development of alternative payment systems that allow for trade in national currencies, reducing exposure to any single currency bloc.

- Lesson in regulatory balance (the "integration" model): Russia’s current model involves high state control and isolation, which stifles innovation and long-term growth [6]. This is not Vietnam's goal. Vietnam must balance autonomy with openness. Its new "emerging market" status [9] demands a transparent, high-quality regulatory framework to attract foreign institutional investment. The goal is to learn from Russia's defensive resilience while committing to offensive integration.

5. Conclusion

Russia’s financial market has survived successive crises by prioritizing national economic security over deep global integration. It has successfully constructed a financial "fortress" capable of withstanding severe external pressure, leveraging domestic infrastructure like the MIR payment system and SPFS. However, as the findings demonstrate, this resilience has come at the significant cost of managed stagflation, higher inflation, and slower long-term growth.

The scientific novelty of this research lies in its concurrent examination of two seemingly contradictory trajectories – Russia's forced pivot towards a “fortress” financial model prioritizing security and autonomy, and Vietnam's proactive pursuit of deeper global financial integration via market upgrade and BRICS partnership. The research confirms that Russia's model, while effective for its specific geopolitical context, is not a blueprint to be copied but rather a critical case study. For Vietnam, standing at a strategic crossroads of market upgrades and new bloc partnerships (BRICS), Russia's experience offers a vital lesson: resilience and integration are not mutually exclusive. The key is to build a hybrid strategy that fosters an autonomous and resilient domestic financial infrastructure while simultaneously pursuing an open, transparent, and rules-based international integration.

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