Residents of Moscow and other Russian cities are running to ATMs and bank branches in search of cash, both in rubles and dollars, amid fears of a collapse of the country’s currency and the inability to use international payment systems.
Queues of people seeking to withdraw foreign currency began to form as early as Thursday morning, after Russian President Vladimir Putin’s decision to launch a full-scale invasion of Ukraine, bringing the ruble to its lowest levels. historical. A Financial Times reporter was able to testify that some branches of international banks ran out of US dollars at noon on Thursday.
The hunt for cash continued over the weekend as European Union countries discussed measures to reduce Russia’s central bank’s ability to use its foreign currency reserves and cut off the country’s creditors from the Swift global payments system. Worried about not being able to make payments with Visa and Mastercard cards, ordinary citizens went looking for money in any currency.
This Sunday (27), the country’s central bank sought to calm markets and depositors, promising to provide banks with ruble liquidity on an ongoing basis, with no limit to the amount of loans that institutions want to make. The monetary authority also said it would “significantly expand” its so-called “Lombard list”, which includes bonds accepted as collateral to help banks cover their refinancing needs.
“The Russian banking system is stable, has sufficient capital reserves and liquidity to function without interruption in any situation. All customer funds are safe and available at any time,” Russia’s central bank said in a statement.
Russia’s domestic payment messaging system, developed in case the country’s banks are cut off from Swift, would continue to work “in any scenario”, he added.
Late last Saturday (26), some people sat on benches in front of empty ATMs waiting for new batches of cash to arrive. Many more lined up in the early hours of Sunday after the United States and its European allies announced sanctions on Russia’s central bank and the country’s biggest creditors.
“I took cash at the beginning of all this and I’m going to look for an ATM again now because I want to have a month’s worth of cash in case of technical failures with the cards. I already had trouble paying a taxi with Google Pay yesterday” , said Ekaterina, a resident of Moscow.
“I believe my bank is not under sanctions and I doubt my money will disappear completely, but there is a risk that I won’t be able to buy food,” she says. “We just don’t know what to expect from the government. I can’t predict it, so I want cash on hand.”
Bankers are concerned about the effect such withdrawals will have on the banking system.
An executive at a western bank in Moscow says cash withdrawals are hurting Russia as the liquidity of banking institutions is dwindling.
Sanctions on the country’s central bank limit its ability to intervene in foreign exchange, once used to stabilize the ruble and keep it from floating freely and collapsing.
The executive says, on condition of anonymity, that Russia’s central bank will try to help the national currency, but he does not know for how long that will be possible. In addition, he says that non-residents are selling Russian assets and getting rid of rubles, which is hurting the country.
Translation by Marcelo Azevedo
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
