Russians hunt for cash as West imposes sanctions on banks
Residents of Moscow and other Russian cities swarmed ATMs and bank branches in search of cash, both in rubles and dollars, as they feared a collapse of the national 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 sent the ruble to all-time lows . A Financial Times reporter observed that some branches of international banks ran out of US dollars by noon that day.
The search for cash continued over the weekend as EU countries agreed on measures to restrict Russia’s central bank’s ability to use its currency reserves and cut some Russian lenders from the payments system. Swift Global. Afraid of not being able to pay with their Visa and Mastercard cards, ordinary citizens went to collect cash in any currency.
On Sunday, the central bank sought to calm markets and depositors by pledging to provide banks with liquidity in rubles at all times, with no limit on how much banks wanted to borrow. It also said it would “significantly expand” its so-called Lombard list, which includes securities it would accept as collateral to help banks cover their refinancing needs.
“The Russian banking system is stable, has sufficient capital and liquidity reserves to operate uninterrupted in all situations. All customer funds are secure and available at all times,” the central bank said in a statement.
Russia’s national payment messaging system, developed in case the country’s banks were cut off from Swift, would continue to operate “under any scenario”, he added.
Late Saturday, some people sat in banks in front of empty ATMs waiting for new batches of money to arrive. Many more lined up in the early hours of Sunday after the United States and its European allies announced punitive measures against Russia’s central bank and the country’s biggest lenders.
“I withdrew money at the start of all this, and I’m going to go back to looking for an ATM now. Because I want to have a month’s worth of money in case there are technical problems with the I already had problems paying for a taxi with Google Pay yesterday,” said Ekaterina, a resident of Moscow.
“I think my bank is not under sanctions and I doubt my money will disappear completely, but there is a risk that I will not be able to buy food,” she said. “We just don’t know what to expect from the government. I can’t predict, so I want the money to be available.
Bankers are concerned about the effect these withdrawals will have on the banking system.
A Western bank executive in Moscow said: “Their cash withdrawals are hurting Russia, banks’ liquidity is decreasing.”
The sanctions imposed on the central bank limit its capacity for forex interventions, which it had previously used to stabilize the ruble and not let it float freely and collapse.
“I can’t even imagine the ruble tomorrow when trading opens,” the banker said on condition of anonymity. “The central bank will try to support [the rouble]The question is [for] How long. Non-residents are selling Russian assets, getting rid of the ruble, and that’s very bad for us.