The sanctions placed on Russia since the start of the Ukriane conflict include the freezing of Russian assets outside of Russia. This consists of significant dollar reserves spread in banks across the world. Like most countries Russia has to make regular payment on bonds issued by the government. Since Russia is not allowed to access it's foreign assets many question whether they will be able to pay their dollar denominated bond obligations coming up in the near future. They could dip into domestic dollar reserves to make these payments which means less funding for the war in Ukraine, as the sanctions intended or could try to make payments in rubles which are unlikely to be accepted. If the government does default, the question of how and when bondholders get paid becomes very important.
https://www.reuters.com/world/europe/moodys-says-russia-may-be-default-dollar-bonds-2022-04-15/
This is really interesting to see as it does not seem that the economic sanctions will be lifted soon. Additionally, I wonder what kind of effect this will hav eon their ability to fight in the war and how much longer they have until they need to start dipping into the domestic dollar reserves.
ReplyDeleteThere was a theory made a couple years ago that Putin, not Elon, was the richest man in the world but with the sanctions now there is no way this can be true.
ReplyDeleteRussia got used to sanctions. It was under sanctions for decades. However, Russia have never faced such severe sanctions from many countries around the world. I will be interested to see how Russia will manage their economy in the next 1-3 years.
ReplyDeleteI think this will be very interesting to see the outcome of. I wonder how long Russia will hold out against the sanctions.
ReplyDeleteI think the sanctions that are put in place on Russia will have less impact in the short run, but in the long run they are going to be affected the most. The standard of living in Russia would decline significantly, as right now Russia is using their 'savings' on the war, and eventually it would deplete which would worsen the situation for the people.
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