Russians lined up waiting to withdraw money 2

Russians lined up waiting to withdraw money 2

Many Russians flocked to banks to withdraw money because they were worried that a series of sanctions from the West could make it difficult for them to make payments.

Russians yesterday waited in long lines to withdraw money in front of ATMs out of fear that new Western sanctions would cause cash shortages and disrupt payments.

`The phenomenon of mass withdrawals began in Russia over the weekend and inflation will immediately spike, the Russian banking system is at risk of difficulties,` said Jeffrey Halley, senior market analyst at

People line up to withdraw money from an Alfa Bank ATM in Moscow, Russia, February 27.

Analysts at financial company Nomura say new Western sanctions against Russia could have a more profound global impact.

`Sanctions from the West will eventually hurt trade flows out of Russia (about 80% of foreign exchange transactions are handled by Russian financial institutions in USD). This will also affect

The Central Bank of Russia today increased the basic interest rate from 9.5% to 20%, one day after announcing a series of measures to support the domestic market, in an effort to handle the consequences of sanctions.

The above move was made to deal with the risk of ruble devaluation and rising inflation.

`External conditions affecting the Russian economy have changed dramatically,` the Central Bank of Russia said in a statement, adding that raising the base rate will ensure an increase in deposit rates to

Previously, the Central Bank of Russia pledged to continue buying gold on the domestic market and ease restrictions on banks’ open foreign currency positions.

They also expanded the number of securities that can be used as loan collateral and ordered securities firms to reject bids from foreign clients to sell Russian securities.

On February 26, the West removed Russia from the global financial settlement system SWIFT, and at the same time applied a series of other measures to prevent Russia from trying to avoid sanctions.

The new measures are likely to deal a blow to the Russian economy, making it difficult for Russian banks and companies to access the international financial system.

Russian President Putin launched a special military campaign in Ukraine on February 24, saying Moscow `cannot feel safe, cannot develop or survive with the constant threat from Ukraine`.

After Russia launched the campaign, the US and its allies imposed a series of sanctions on Moscow as well as President Putin, including a very heavy measure to prevent some Russian banks from accessing SWIFT.

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