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Ruble in nosedive, and three Russian banks in Europe about to collapse

Posted on by admin



The ruble is losing ground against the euro and dollar. This morning, the Russian currency lost more than 20 percent of its value against the euro; it is now worth less than a cent. The price decline follows a weekend in which several sanctions against Russia were announced by the European Union, the United States, the United Kingdom and Japan, among others.

For example, several Russian banks were evicted from Swift. This is a messaging system with which banks communicate with each other internationally. Transferring money to foreign banks is made very difficult.

Support ruble

Normally, the Russian Central Bank would be able to support the ruble exchange rate with those currency reserves, but now that is no longer possible. The European Union announced this weekend with allies to freeze the currency reserves of the Russian central bank. As a result, Russia cannot access its dollars and euros that are deposited at many foreign banks.

The Moscow stock exchange says that stock trading will not start this morning. What time trading starts will be announced later. Currency trading will begin. Exchanges may delay trading if they expect a lot of turbulence, in order to create calm.

The Russian central bank has since raised interest rates to support the weak ruble and raging inflation. The base rate is now 20 percent, which means doubling.

Three European banks

The European Central Bank (ECB) also warns that three institutions supervised by the ECB will soon be unable to meet their obligations and are therefore likely to go bankrupt. These are subsidiaries of the large Russian Sberbank in Europe, Sberbank Europe AG in Austria and two subsidiaries in Croatia and Slovenia.

There is a significant outflow of funds at these Russian banks and customers are withdrawing their money en masse because of the war and geopolitical tensions, according to the ECB. As a result of this bank run, the banks no longer have enough cash in hand, and due to the international financial sanctions they can no longer replenish it from the parent bank, other banks or the central bank.

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