Russia is considering seizing the savings of Russian citizens in the event of an economic crisis. Fearing severe financial sanctions from Europe and the United States, the Russian government will not hesitate to appropriate the $750 billion held in the bank accounts of its people.
Russia reserves the right to confiscate the savings of its citizens
Russia will not hesitate to seize the money available in the bank accounts of Russians in case of economic crisis. Nikolai Arefyev, a member of the Communist Party and deputy chairman of the parliament’s economic policy committee, spoke to News.ru, a Russian online media outlet, about the measures to be taken in the event of sanctions by Western countries.
“If all the funds that are abroad are blocked, the government will have no other way out than to seize all the deposits of the population to get out of this situation,”says Nikolai Arefiev.
According to the deputy of the Duma, the lower house of parliament in Russia, the Russian population has 60 trillion rubles, or $750 billion, in its bank accounts. The politician said that Russia has $640 billion in gold and foreign exchange reserves abroad.
The 1.4 trillion rubles for social welfare are also stored outside Russia. This is also the case with the capital held by Russian oligarchs, which is estimated at $470 billion, says Nikolai Arefiev to justify the measures planned by the government. In the interview, the MP clearly stated that Russia will never be able to return the money that would potentially be confiscated.
This statement comes as the United States and Europe have begun to impose financial sanctions on Russia. As early as February 22, the United Kingdom froze all assets held by five Russian banks and three billionaires close to the Kremlin on British territory.
Before the February 24 invasion, the European Union had also targeted three Russian banks with similar measures. For its part, the United States targeted two Russian financial institutions, the Development Bank of the Russian Federation and the country’s military bank, Promsviazbank. Washington claimed it wanted to cut off the nation from foreign financing.
“We are implementing sanctions on Russian sovereign debt. The government can no longer raise money in the West, nor can it trade its debt in Europe,”said Joe Biden, president of the United States on February 22, 2022.
The invasion of Ukraine by Russian troops could push Western countries to take tougher measures. Boris Johnson, Prime Minister of the United Kingdom, had already pledged to go further if Russia continued to deny “the legitimacy of Ukraine as a state. This is also the case with Joe Biden.
An exclusion from the Swift network?
According to Nikolai Arefiev, the government also believes that Western countries could decide to exclude all Russian banks from Swift, the interbank network launched in 1973. Western countries made this threat, described by the United States as a “nuclear weapon”, at the beginning of the tensions between Russia and Ukraine. So far, Iran is the only country to have been effectively banned from the Swift network.
At the same time, the Russian invasion forced the Ukrainian Central Bank to take immediate steps to control capital. Bank withdrawals are now restricted throughout the country. In addition, foreign currency withdrawals are prohibited within Ukraine.
People deprived of full access to their assets have often turned to crypto-currencies to escape bank restrictions. There is no shortage of examples. In 2015, the National Bank of Greece limited bank withdrawals to 60 euros per day in order to prevent capital flight. At the same time, transactions made in Bitcoin (BTC) increased by 300% in one month.
The same thing happened on the island of Cyprus in 2013. For weeks, Cypriots were limited to daily withdrawals of 300 euros. Many savers then turned to the queen of cryptocurrencies to emancipate themselves from the banking system. Following the financial crisis in Cyprus, Bitcoin has experienced a resurgence in popularity. The first Bitcoin ATM was opened on the island.