Russia has seen a bank panic as people rush to cash out amid increasing sanctions. Also, the Russian ruble plunged more than 30 percent to an all-time low. “There are about 70 people in line. Eyewitnesses say the money in the ATM runs out within 40 minutes.”
Russians rush to withdraw cash as sanctions intensify
The Russian ruble nosedived 30% to a record low against the U.S. dollar Monday morning, falling as far as 119.50 per dollar from Friday’s close as offshore trading started in the morning during Asia hours. Russia’s biggest lender, Sberbank, which has a listing on the London Stock Exchange, also plunged 75% Monday.
The plunge followed the European Commission announcing Saturday that Western allies will impose restrictive measures on the Russian central bank’s international reserves worth $630 billion. European Commission President Ursula von der Leyen said:
We will paralyze the assets of Russia’s central bank. It will also freeze all transactions. It will also make it difficult for the central bank’s to liquidate their assets.
Canada, its European allies and the United States have reached an agreement to block key Russian banks from SWIFT. This interbank messaging system connects over 11,000 financial institutions and banks in more than 200 countries.
“The military conflict will last longer than Putin expected and the reaction of the West and the global community might be more harmful than he expected too,” Alexandre Moutin, head of investments at SMBC Private Wealth, was quoted by BBC News as saying. He said that:
The bank run is currently ongoing, and it will probably intensify over the next few days.
Russia’s central bank, the Bank of Russia, had to increase the amount of money it supplies to ATMs Friday after the demand for cash reached the highest level since March 2020.
Many have shared videos and photos of the long queues at Russian ATMs. One user on Twitter shared a video of “a queue for a Tinkoff ATM in the Liga shopping center in Khimki.” He described:
About 70 people are waiting in line. Eyewitnesses claim that the ATM is empty in about 40 minutes.
Russia’s central bank has urged citizens to calm down, stating Sunday that it has “the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector.”
But, cash withdrawals are not slowing down. A St. Petersburg resident told Reuters: “Since Thursday, everyone has been running from ATM to ATM to get cash. Some are lucky, others not so much.”
Another person waiting to withdraw cash at an ATM told Bloomberg, “I’ve stood in lines for an hour, but foreign currency is gone everywhere, just rubles.”
Jeffrey Halley (Oanda senior market analyst based in Asia), told Reuters:
A bank run has already started in Russia over the weekend … and inflation will immediately spike massively, and the Russian banking system is likely to be in trouble.
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