Posted Feb 28 2022 at 07:16 PMUpdated on March 1, 2022 at 7:14 am
Bank panic, collapse of the rouble, downgrading of Russia’s debt to junk (rotten) category by S&P, suspension of trading on the Moscow Stock Exchange, flight of investors… While they have not even fully entered into force, the sanctions announced this weekend by the West are already pushing the Russian financial system to the brink.
The freezing of the assets of the Russian Central Bank has pulverized the fortress built in recent years by Moscow. Between 2018 and 2021, oil and gas revenues had helped inflate the reserves of the Russian Central Bank by 40%. “With $631 billion in reserves at the Central Bank and $185 billion in assets held by the national sovereign wealth fund, the Russians thought they had enough to support themselves for a long time even in the event of international sanctions,” recalls Eric Dor, Director of Economic Studies at IESEG School of Management.