Russians Hoard Cash in Wake of Bank Sanctions
In Moscow and other Russian cities, people are trying to get cash, both in rubles and dollars, due to fears of a fiscal crash following the invasion of Ukraine, Financial Times writes.
There were long lines of people trying to withdraw foreign currencies as soon as word of the invasion spread, and some banks ran out of U.S. dollars by midday Thursday.
President Vladimir Putin’s decision to invade Ukraine on Thursday sent the ruble to historic lows.
Over the weekend, EU countries agreed to measures to curtail the Russian central bank from using its foreign currency reserves, and cut off some lenders from the SWIFT global payment system.
On Sunday, the central bank said it would continuously supply banks with ruble liquidity, without any limits on the amounts banks wanted.
The bank said it would also expand its “Lombard list,” which comprises the securities it will accept as collateral to help banks refinance.
“The Russian banking system is stable, has sufficient capital reserves and liquidity to function without outages in any situation. All client funds are secure and available at any time,” the central bank said in a statement.
Read more: US Allies Escalate Financial War Against Putin, Freeze Russian Central Bank Foreign Reserves
PYMNTS wrote Saturday that the reports of Russia’s military action have spawned a “financial war” of economic sanctions.
There was a joint communique from the European Commission, France, Germany, Italy, the United Kingdom, Canada and the United States condemning Putin’s “war of choice” that also outlines further restrictive economic measures, such as freezing about $630 billion in foreign reserve assets from the Central Bank of Russia held overseas.
The weekend action also included blocking select Russian banks and wealthy individuals from accessing the SWIFT global payments and messaging network.