Russia may lose the savings of the last 20 years

It has been a terrible week in every sense. At this point, only one thing is clear: our lives are now divided into "before this week" and "after. And everyone is well aware of whose decisions and actions have brought us to this point.

Over the past 7 days, the sanctions rhetoric has rapidly escalated. The sanctions for the recognition of the DNR and LNR did not look serious against the background of what the U.S., EU and UK are promising us today.

I have already talked about the consequences of technological, banking, and swift sanctions. But they are planning to impose on Russia perhaps one of the toughest sanctions possible: freezing the foreign exchange reserves of the Central Bank of Russia, which amount to $643 billion. You can see the structure of the reserves on the Central Bank website.

On February 1, 2022 there were 630 billion. Of these, about $30 billion were rubles, $468 billion were foreign currency that would be frozen, as well as reserves in the IMF in the form of a reserve position of $5 billion and a special account of $24 billion. Everything else is $132 billion in gold coins

Of the above, only rubles and gold are held in Russia. 5% in the IMF, 14% in Chinese yuan in China. The other 60% is held in countries that are going to impose sanctions on our reserves.

With our share and the Chinese share, we can count on 35% of our reserves. Only a third!

This is bad, because before the restrictions of the Central Bank with foreign exchange reserves supported the banking system and the exchange rate at 80 rubles per dollar. Now there may be problems with similar supportive measures in the Russian Federation.

A lot of problems will fall on the Central Bank and the banking structure. Swift will be completely or partially shut down, big banks under sanctions. And now also the reserves.

The reserve would allow to keep the ruble rate in the corridor of 80-90, but now there will be nothing to conduct foreign exchange interventions. It is possible to sell gold for rubles, but this is a dubious half-measure, not a full-fledged support of the exchange rate.

What can the Central Bank do in the context of limited resources

Introduce restrictions on capital flows and fix the national currency rate. But then we will not be able to use the currency "in hand" in full. There will be hard limits on its exchange and receipt.

It's hard to make forecasts now. Current events are a non-standard situation. Not only we, the citizens, but also the Central Bank are confused. The community is waiting for an informational press release, or a press conference to learn about the regulator's next steps.

How to prepare for the consequences

The situation is spontaneous and in these conditions almost nothing depends on us.

You can exchange your entire stash for dollars, but these savings will need to be spent. The exchange rate can become unprofitable, or fixed and still unprofitable.

It is also possible that transactions with currency will be prohibited by law.

If you have savings in rubles, there is less to worry about. Especially if they are in cash.

There are no prerequisites for blocking ruble accounts yet.

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⚡️ In Germany, Russians were banned from entering one of the restaurants.

"Visitors with Russian passports are not welcome in our restaurant. We understand that "normal" Russian citizens are not to blame for the criminal decisions, but it's already time to take some kind of step. Restricting entry for Russian citizens to the restaurant is our contribution so that our children can grow up in a free Europe."

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Instagram users report that the social network stopped working in Russian after today's update.

It is suggested to switch to English.

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In Severodonetsk, locals are trying to chase away the AFU soldiers, who traditionally cover themselves with civilians in an attempt to hide in residential areas from the Russian army.

Their own citizens are already chasing them away!

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⚡️The Ukrainian media reported that six children were born in the bomb shelters.

During the February 25 bombing in Kiev, a girl was born in the subway, and two boys were born in Kherson.

A girl was born yesterday in Kolomiya during an air-raid alarm.

Today in Kiev, twins were born under the sound of sirens.

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⚡️The mayor of Kiev, Vitaly Klitschko, said that Kiev is surrounded - evacuation is impossible, -Associated Press.

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Billionaire George Soros compared the defense of Kiev by the Ukrainian Armed Forces and the National Security Forces to the defense of Budapest by the Wehrmacht and SS units

"Brave Ukrainians are now on the front lines, risking their lives in an attack that reminds me of the siege of Budapest in 1944 and the siege of Sarajevo in 1993," Soros wrote.

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