Cash Rush: Russian Central Bank Urges Calm
Moscow, Feb 27: Russia’s central bank is appealing for calm amid fears that new financial sanctions could spark a run on its banks as too many people try to withdraw money.
In a statement issued, it said: “The Bank of Russia has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector”.
On Saturday, Europe, the US, the UK and Canada announced that assets of Russia’s central bank will be frozen. It has reserves of around $630 billion. The sanctions against the Bank of Russia would stop it from selling assets overseas to support its own banks and companies, the BBC reported.
Europe, the US and its allies have also announced that a number of Russian banks will be removed from SWIFT, the international payment system which is pivotal for the smooth transaction of money worldwide. Analysts predict that on Monday, when most markets reopen, the value of the rouble will drop – and such Russians have rushed to remove their money from banks.
“These new sanctions are likely to cause serious damage to the Russian economy and its banking system”, the BBC quoted Clay Lowery, executive vice president at the Institute of International Finance, as saying. “This will most likely exacerbate ongoing bank runs…causing a sharp sell-off, and a drain on reserves,” Lowery said.
