[Economics] The Bank of Russia admits that the sanctions hit the real economy

[#Wittels-]

The governor of the Russian central bank, Elvira Nabiulina

 

Beyond the political rhetoric, Western sanctions are beginning to hurt the Russian economy. Central bank Governor Elvira Nabiullina said they hit the financial sector first, but will now have "a bigger impact on the economy in general." In his opinion, “the main problems will be associated with import restrictions, foreign trade logistics and, in the future, possible restrictions on the export of Russian products”, examine.

 

“The imposition of sanctions caused strong volatility in the market and added to this was the nervousness of the po[CENSORED]tion, so that at the beginning of March, the outflow of funds from citizens amounted to 2.4 trillion rubles.
(27,357 million euros)”, admitted the governor.

 

In her speech, Nabiullina sent another message: Russia's ability to save is limited. “The period in which the economy can live on reserves is finite. And already in the second and third we will enter a period of structural transformation and search for new business models”, he acknowledged.

Long before the invasion of Ukraine, the central bank began reducing its exposure to the dollar, bringing its share over the past decade to just under 11% of its total penalty reserves last year. This would have allowed it, as planned by the Kremlin, to have a large volume of foreign currency with which to support the military attack. But more than a third of the total was in euros, plus additional investments in currencies such as the British pound and the yen.

 

And this made it possible for international governments to seize about half of the reserves in retaliation for President Vladimir Putin's attack. The restrictions imposed on the Bank of Russia prevented the entity from intervening in the market to defend the ruble, forcing it to impose capital controls and to increase the emergency interest rate to calm the markets.

Its reserves peaked at $643.2 billion on February 18 and then declined, before leveling off. Moscow wants to go on the counterattack: since half of them cannot be used, it plans to take legal action for the blockade of gold, currency and assets belonging to Russian citizens, although, as Elvira Nabiullina said, “the measure will have to be carefully thought out and legally justified”.

 

Link: https://www.lavanguardia.com/economia/20220419/8205399/banco-rusia-admite-sanciones-golpean-economia-real.html