Russia to seize retail deposits if sanctions go too far, official warns

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In the event of harsh West­ern sanc­tions, Rus­sians’ sav­ings could be con­fis­cat­ed, accord­ing to Niko­lai Are­fiev, a mem­ber of the Com­mu­nist Par­ty of the Russ­ian Fed­er­a­tion and vice-chair­man of the Duma’s com­mit­tee on eco­nom­ic policy.

The Russ­ian gov­ern­ment can poten­tial­ly seize about 60 tril­lion rubles ($750 bil­lion) worth of people’s deposits should West­ern nations decide to block all of Russia’s for­eign funds, Are­fiev said in an inter­view with the local news agency NEWS.ru on Monday.

“If all the for­eign funds are blocked, the gov­ern­ment will have no oth­er choice but to seize all the deposits of the pop­u­la­tion, or 60 tril­lion rubles in order to solve the sit­u­a­tion,” the offi­cial stat­ed, not­ing that Rus­sia stores over $640 bil­lion of gold and for­eign exchange reserves abroad.

He also men­tioned that poten­tial sanc­tions against Rus­sia include a pos­si­ble dis­con­nec­tion from SWIFT and for­eign exchange prohibitions.

Russ­ian Pres­i­dent Vladimir Putin offi­cial­ly announced a spe­cial mil­i­tary oper­a­tion in Ukraine, poten­tial­ly pulling the trig­ger on a set of sanc­tions on Russia’s largest banks, includ­ing state-backed Sber­bank and VTB.

Accord­ing to local reports, Sber­bank mis­tak­en­ly made a state­ment on being includ­ed in the list of sanc­tions by the Unit­ed States on Thurs­day night but sub­se­quent­ly removed the notice, claim­ing that the state­ment was false and was caused by a “web­site crash.”

At the time of writ­ing, Sberbank’s web­site reads that Sber­bank and all its sys­tems are oper­at­ing as nor­mal, while clients and legal enti­ties have access to their funds and ser­vices in full.

“We are ready for any devel­op­ment of the sit­u­a­tion and have worked out sce­nar­ios to guar­an­tee the pro­tec­tion of the funds, assets and inter­ests of our clients, as well as to ensure the reg­u­lar oper­a­tion of all our func­tions,” the notice says.

On Thurs­day, Rus­si­a’s Min­istry of For­eign Affairs declared that it will make sure to respond to poten­tial West­ern sanc­tions, stat­ing, “Make no mis­take, we will respond strong­ly to these sanc­tions, not nec­es­sar­i­ly in a sym­met­ri­cal man­ner, but the response will be well cal­i­brat­ed and will not fail to affect the Unit­ed States.”

Bal­a­ji Srini­vasan, a cryp­to investor and for­mer chief tech­nol­o­gy offi­cer of Coin­base, sug­gest­ed that the min­istry was threat­en­ing a cyber­war with the West:

The lat­est news comes as the Russ­ian ruble plum­mets to an all-time low against the U.S. dol­lar, with indices surg­ing up to 115 rubles or more per U.S. dol­lar for those who want to buy dol­lars on the open mar­ket, up 35% from 74 rubles just a cou­ple of weeks ago. Accord­ing to local reports, Sber­bank was offer­ing its clients to buy dol­lars at 100 rubles on Thursday.

As West­ern sanc­tions tar­get Russia’s largest banks amid the Russ­ian forces invad­ing Ukraine, retail cus­tomers are now report­ed­ly at risk to lose their sav­ings at banks.

USD/RUB 30-days chart. Source: TradingView

The lat­est events have trig­gered a mas­sive impact on the Russ­ian stock mar­ket and cryp­tocur­ren­cy mar­kets, with Bit­coin (BTC) briefly drop­ping below $35,000 for the first time since June 2021, accord­ing to data from CoinGecko. The total mar­ket cap­i­tal­iza­tion tum­bled below $1.7 tril­lion for the first time since August last year.

Accord­ing to Sam Bankman-Fried, CEO of FTX cryp­tocur­ren­cy exchange, the mas­sive sell-off on cryp­to and stock mar­kets are “to pay for war.”



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