Black market fears, problems with online payments and the looming specter of inflation – Russian officials are scrambling to deal with the effects of sanctions imposed on Russia following its military intervention in Ukraine.
On the streets of Moscow, there are few signs of panic – restaurants are open and busy during an extended public holiday that will last until March 8, when the country celebrates International Women’s Day.
But in government departments and banks, there are growing concerns about the economic fallout that has seen giant international corporations flee Russia and questions about the health of the banking sector.
The central bank has in recent days taken unprecedented measures, including capital controls, to support the struggling economy and the Russian ruble.
The national currency has lost about a quarter of its value against the US dollar since the start of what the Kremlin called a “special military operation” in Ukraine on February 24.
The ruble’s fall has brought back memories of the financial turmoil of the 1990s, when millions of Russians saw their savings evaporate due to currency devaluation and soaring inflation.
Emerging black market
For now, ensuring basic commodities remain affordable and plentiful is a key objective for the authorities.
The Ministry of Trade and Industry sounded the alarm on Saturday over cases of purchases of essential foodstuffs “in a volume significantly higher than what is needed for private consumption…for subsequent resale”, indicating the emergence of a black market.
To combat bulk buying, major retailers have decided, through their trade organizations, to limit the quantities of essential foodstuffs that can be purchased by individuals at any time, the ministry said in a statement.
Russia could also decide to cap the prices of around 20 basic foodstuffs — meat, fish, milk, flour, sugar, oil, cereals, butter, rice, bread, cabbage, carrots, onions and potatoes — as an additional anti-inflationary measure. measure.
So far, the government has taken no steps in this direction.
But analysts warn that rising prices are already a reality, even though there are no government statistics to reflect the trend.
Catering groups interviewed by Russian journalists reported considerable price increases from their suppliers, even for local products.
A meeting with Moscow City Hall was scheduled for Wednesday.
Better carry cash
In another sign of impending trouble, the central bank has asked lenders not to publish their financial statements from February.
This decision was necessary “to limit the risks of credit institutions linked to sanctions imposed by Western countries”, the Bank of Russia said on Sunday.
The first few days after the announcement of Western sanctions saw long queues appear at ATMs in Moscow and other cities.
Now, analysts fear that any question about the financial health of individual banks could trigger a bank run.
In another blow, the EU this week cut seven Russian banks from the SWIFT payment system, while Mastercard and Visa announced on Saturday that they were suspending operations in Russia.
As the two Western payment giants leave the market, China looks poised to step into their shoes as a number of Russian banks have announced plans to issue cards using China’s UnionPay system.
The country’s largest private lender, Alfa Bank, said on Sunday it was “already working on launching cards on UnionPay, China’s national payment system”, with Russia’s top bank, Sberbank, issuing a similar statement.
The Russian central bank said Visa and Mastercard cards already issued by domestic banks will continue to work in Russia until they expire, as all payments in Russia are made through a national system.
However, he warned that Russians traveling abroad should carry cash.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)