Russians line up for cash as West targets banks on Ukraine

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Plastic letters arranged to read ‘Sanctions’ are placed in front of the colors of the flags of Ukraine and Russia in this illustration taken February 25, 2022. REUTERS/Dado Ruvic/Illustration

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MOSCOW/LONDON, Feb 27 (Reuters) – Russians waited in long queues outside cash machines on Sunday, fearing that new Western sanctions against Moscow’s invasion of Ukraine could cause shortages of liquidity and disrupt payments.

Measures to block some Russian banks from the SWIFT global payment system and freeze Bank of Russia reserves are expected to deal a severe blow to the economy, although Russian authorities and lenders have sought to allay fears.

“Since Thursday, everyone has been running from ATM to ATM to get money. Some are lucky, some are not,” said St. Petersburg resident Piotr, who declined to give his opinion. Last name.

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Russians waited in long lines, fearing bank cards would no longer work or banks would limit cash withdrawals.

While SWIFT’s decision will prevent Russian banks from communicating with their international peers, analysts say limiting the use of more than $630 billion in international reserves could prove even more costly for Russia. Read more

Sergey Aleksashenko, a former vice president of Russia’s central bank who now lives in the United States, said the Russian national fund would effectively disappear.

“(President Vladimir) Putin and (former Finance Minister Alexei) Kudrin built it for years, thinking about a major war,” he said. “The war has come, and there is no money.”

BANKS CALL FOR CALM

Russian banks on Sunday sought to allay fears over the money supply and online payment systems.

Meanwhile, the rates offered for forex have skyrocketed. The ruble closed Friday at 83 to the dollar, but some lenders were offering rates above 100 on Sunday.

Russia’s largest lender, Sberbank (SBER.MM), said it saw no disruption to customer transactions through its own payment systems and those of its partners. State development bank VEB said external restrictions would not prevent it from supporting projects in Russia.

Otkritie, bailed out by the central bank in 2017, said the new restrictions would not have a significant impact beyond the use of his bank cards abroad.

The central bank, however, advised citizens to carry their bank cards, saying mobile payment systems might not work at all with terminals or online shops operated by one of the five most heavily sanctioned banks. .

Moscow resident Sergei said he should order a new card and remember how to live like he did five years ago when he stopped using cash.

“I’m used to living in the 21st century, not carrying around plastic cards. Everything is installed on my smartphone,” he said. “I’m definitely against it.”

Russian lawmaker Andrei Klimov was quoted by RIA as saying: “Russia’s exit from SWIFT poses no threat to our domestic regulations, boosts the ruble as an international currency and at the same time reduces the possibility of scrutiny. destroyer of the West on our settlement operations. “

DISASTER

But some have warned of catastrophic economic damage now that the West has announced it is freezing central bank reserves.

“The most important thing is that the West freezes Central Bank reserves,” former Russian Prime Minister Mikhail Kasyanov wrote on Twitter. “There is nothing to support the rouble. They will turn on the printing press. Hyperinflation and disaster for the economy are not far away.”

Russia’s central bank did not respond to requests for comment on the asset freeze on Sunday.

Roman Borisovich, a former Moscow investment banker, said markets would be “messy” on Monday.

“(Russian authorities) will put controls in place for sure. They can’t defend the ruble but they will probably stop trading and fix the ruble at an artificial rate like they did before. There will be a black market” , he added. noted.

The central bank said its Monday buyout auction would have no limit.

In Moscow, one resident, Tatiana, said she didn’t expect to suffer too much because she doesn’t earn much and, despite the inevitable fallout, thought the Russians would pull through.

“We’re people who’ve been through a lot of ups and downs over the years,” she said. “We will also overcome this because it is for a good cause. I salute everything Putin does.”

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Reuters reporting in Russia, Catherine Belton in London; Additional reporting by Tom Sims; Editing by David Clarke and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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