The package of sanctions against Russia decided by the United States and the European Union to punish Vladimir Putin’s invasion of Ukraine, together with the threat to exclude Russian banks from Swift, the system that guarantees most international transactions, scare the financial system. And they pushed the Russian central bank, led by Elvira Nabiullina, to immediately intervene with a series of measures to maintain financial stability and business continuity as well as anticipate a possible rate cut in one of the next three monetary policy meetings. The Bank of Russia ready to use all necessary tools, said the governor.
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Defer bonuses and dividends
Faced with increased volatility
which sank the Moscow stock exchange on Thursday (yesterday the price list rebounded by 18%), while the ruble reached new lows on the euro and the dollar, among the measures announced on the Central Bank’s online site, there is the recommendation to the institutions under its supervision to defer the payment of dividends and bonuses to managersto preserve the financial solidity of the institutions.
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Even the EU Commission, at the beginning of the great financial crisis of 2007-2008had banned the bonuses to bank managers, while at the beginning of the Covid pandemic it was the ECB that asked credit institutions to postpone the dividends.
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Liquidity injection
With the aim of maintaining financial stability, the governor Nabiullina, 58, an economist very loyal to Tsar Putin and since 2013 at the helm of the central bank, also immediately began to strengthen the banking sector with extra liquidity and to sell foreign currency on the foreign exchange market. changes to stop the fall of the ruble. As published on her website, the central bank of Russia provided banks with 1.9 trillion rubles (22.87 billion dollars) on 3 trillion rubles on offer in a three day repo auction.
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The central institution also has the list of guarantees that it agrees to take in exchange for liquidity from the banks has been expanded and has lowered the rating requirements, expanding refinancing options for the financial sector grappling with looming Western sanctions.
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Stop abroad and on the foreign websites of the cards of the sanctioned banks
As for payments, the central bank reassures that cards issued by banks sanctioned by Western countries work and will also work in Russia without restrictions and that client funds in card-linked accounts are kept safe and fully available. But customers of sanctioned banks (banche del gruppo VTB, Sovcombank, Novikombank, Promsvyazbank, Otkritie)they will not be able to pay with cards from these banks outside Russia and use them to pay for services in online stores and in the service aggregators registered in the countries that support the sanctions.
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The women’s bank
A curiosity about the Russian Central Bank. In addition to Governor Elvira Nabiullina at the top of the bank for 9 years, two of the first five deputy governors are women, a woman one of the three deputy governors, as well as a woman head of the Bank of Russia’s main branch for the central federal district.
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