Bank run, ruble plummeting, interest rates doubling, stock market closed: Russians feel the cost of economic sanctions firsthand.

By Luís Costa Pinto, from 247 – A typical family in post-Soviet Russia was preparing to finalize a real estate deal this Monday, February 28th. In the second week of the year, they sold a small apartment near Yekaterinburg, Russia's third-largest metropolis, located at the foot of the Ural Mountains, and kept the money in a bank account until the final purchase of another property. The payment was scheduled for this morning – the new apartment would be rented out, and the rental income would supplement the family income of the retired father and the accountant mother. They have one son of university age and two others who are already professionals, one of whom lives in Brazil.

There was no business: bank branches were closed, ATMs sealed throughout Russia. The ruble, the local currency, which was quoted at 1 dollar to 83 rubles on Friday afternoon, woke up at 1 dollar to 98,5 rubles on Monday. All bank loans suffered a mandatory increase in interest rates from 9,5% to 20% – including already contracted loans. 

The Russian Stock Exchange, which plummeted 42% on the first day of the attacks on Ukraine, did not open on the last day of February. There was a bank run throughout the country, where branches closed to prevent withdrawals. Special police patrols were deployed to contain the anger of those who wanted to make banking transactions and were unable to. 

The local Ministry of Economy ordered the blocking of any orders for the transfer of assets between non-residents. These were the first and incipient signs of the popular impact of the economic sanctions imposed on Russia by the United States, the European Community, the United Kingdom, Japan, and Canada. Over time, and this is what the financial "warlords" of the Western world believe, internal dissatisfaction with the financial limitations and the impoverishment of the population that will be caused by international sanctions will undermine Vladimir Putin's internal power from within.

The risk of collapse of the largest Russian banks is a reflection of international sanctions.

The European arm of Sberbank (SBER.MM), Russia's largest lender, faces the possibility of bankruptcy, the European Central Bank (ECB) warned on Monday (28), following a run on deposits by customers in reaction to the Russian invasion of Ukraine., as per the text published earlier here on 247 with information from the Reuters agency.

Sberbank Europe and two other subsidiaries of the Russian financial institution were on the verge of collapse after "significant deposit outflows" linked to "geopolitical tensions," according to the European Central Bank. The Austrian Financial Market Authority imposed a moratorium on Sberbank Europe, which is headquartered in the country.

Shares of major banks fell, with the European banking sector (.SX7P) dropping 7%, a sharper decline than the 2,5% fall in the Euro Stoxx index (.STOXXE).

Market turbulence occurred as Russian invasion forces seized two small towns in southeastern Ukraine and the area around a nuclear power plant, as Moscow's diplomatic and economic isolation deepened. 

Reluctant to acknowledge the strong domestic impact of the US, European, and Japanese economic sanctions on Russia, Kremlin spokesman Dmitry Peskov, He said the sanctions are harsh, but the Russian economy would be able to mitigate them."The sanctions are heavy, they are complicated, but we will overcome them," he noted.

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