New York The next round of sanctions against Russia also targets the Russian central bank. The Western states want to impose measures that “prevent the Russian central bank from using its international reserves in a way that undermines the effectiveness of our sanctions”. This emerges from the joint statement on Saturday, which the USA published together with Germany, France, Italy, Great Britain, Canada and the European Commission.
Exact details are still being worked out and could be published as early as Sunday. “But it’s already clear that this is a significant step,” said Josh Lipsky of the Atlantic Council think tank. Imposing sanctions on a central bank “is probably the move that causes the most pain in the international financial system.”
The decision came much faster than initially expected. There have never been sanctions against a central bank of the 20 large industrialized countries (G20). “This is unprecedented,” Lipsky said.
The central bank had already cushioned a fall in the ruble due to the economic burdens resulting from the war and sanctions by intervening in the foreign exchange market in the past few days. The EU countries, USA and Great Britain now want to restrict the possibilities of the Russian central bank to support the ruble exchange rate with international financial transactions.
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Brian O’Toole, sanctions expert at Bank Truist Financial, expects the ruble to collapse massively on Monday and there will be a bank run. The prices for the Russian population could rise massively. “This could be the beginning of the end for Putin,” he said at an event hosted by the Atlantic Council on Saturday. “It will be interesting to see if the oligarchs will show any backbone when the Russian economy is about to collapse.”
EU Commission chief Ursula von der Leyen announced in a separate statement on Saturday: “We will freeze the assets of Russia’s central bank.” That will make transactions impossible. “And the central bank will not be able to liquidate its assets.” The alliance partners also announced that they would exclude Russian banks from the Swift international payment information system.
Putin’s resilience has repeatedly been justified by the fact that Russia has accumulated enormous foreign currency and gold reserves in the past. Most sources speak of a volume of 630 billion dollars, according to other sources it should be around 500 billion dollars.
Expert believes the collapse of the Russian financial system is possible
Elina Ribakova, deputy chief economist at the Institute of International Finance, spoke of a “significant cumulative effect” that would emanate from the decisions of western countries. “Russia’s economy could have coped with a shock, but not all at once.” She therefore believes that a collapse of the Russian financial system is possible. It will be difficult to recover from that, believes Daniel Fried of the Atlantic Council. “This is an Economic Cold War”.
Experts are preparing for a turbulent week. Former Deputy Chairman of the Central Bank of Russia Sergei Aleksashenko predicts that “on Monday there will be a catastrophe in the Russian foreign exchange market. I think they will stop trading and then artificially fix the exchange rate like in the Soviet Union times.”
This is how the Handelsblatt reports on the developments in the Ukraine crisis:
Mohamed El-Erian, Allianz advisor and chairman of Gramercy Fund Management, expects “inevitable repercussions on the global economy.” It is likely that Russian companies will default on payments to Western companies and creditors.
“This action will worry many investors”
Senior market analyst at Oanda Edward Moya said many traders were convinced the US and Europe would not take a tough stance. “This action is going to be really hard to digest and it will worry a lot of investors. Much of the rebound we saw over the second half of last week will be put to the test.”
Wall Street bankers are also concerned about Putin’s next moves. “The question is: how far did Putin think the western countries would go with their sanctions? And what will he do if there is no plan B and his back is against the wall?” Daniel Alpert of the investment bank Westwood Capital considers. He refers to Putin’s threats to launch nuclear and cyber attacks.
Investment bank Goldman Sachs held a briefing with former MI6 chief Alex Younger for its clients on Thursday, Bloomberg reported. Younger is now one of the financial institution’s advisors and is also said to have spoken about how a nuclear confrontation is a real possibility for the first time in 30 years.
with agency material
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