The Wednesday, The European Union has announced that it intends to remove seven Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system within 10 days.
The list of sanctioned banks includes Russia’s second largest bank, VTB, Bank Otrkitie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank and VEB. Without access to SWIFT, a Belgian messaging system that connects more than 11,000 financial institutions worldwide, Russian banks and, on behalf of Russia’s economy, it is likely to suffer serious losses. For example, Iran lost 30% of its foreign trade after SWIFT was banned in 2012.
VTB share price | Source: Yahoo Finance | Note: Trading on the Moscow Stock Exchange is currently suspended.
But in context, the sanctions are having a more devastating impact on ordinary Russians than on the dictators themselves. Although no one knows for sure, estimates put Vladimir Putin’s net worth in the billions of dollars, meaning the Russian president can still live a relatively luxurious life even if the vast majority of his net worth has been depleted by such punitive measures.
However, the same cannot be said for the Russian people. According to XE, the Russian ruble has lost almost 30% of its value since the invasion of Ukraine began a week earlier. The economic consequences are said to have wiped out the savings of ordinary Russians. To make matters worse, the EU forbidden Send euro banknotes to Russia on the same day.
RUB to USD exchange rate | Source: XEÂ
Crypto trading volume is rising in part due to strong demand from Russia and Ukraine, where both countries face serious risks of currency destabilization. Stablecoins, in particular, play an important role in countries facing ever-tougher sanctions. For example, Venezuelan emigrants described to Cointelegraph how they are supporting their families still in the country by converting their local salary into Tether (USDT) via an app called Reserve amid the current hyperinflation.
On the same subject, “Ardashir”, an Iran-based cryptocurrency enthusiast whose name has been changed to protect his identity, previously described to Cointelegraph how digital currencies have become a key vehicle for accessing services amid sanctions against the country:
“Here we don’t have Visa, MasterCard or any kind of credit card. Thanks to bitcoin and cryptocurrencies, we can buy things like Xbox, Apple gift cards, VPN, plane tickets, etc.”
Asked about the role cryptocurrencies play in fighting inflation in Iran’s Toman, Ardashir added:
“For example, if you want to buy a box of matches today, it is better to wait until tomorrow when it will be much cheaper, since the real value of the toman will go down. So people want to save the value of your money with digital currencies”.
The Russian ruble plunged to a new all-time low of 122.24 RUB/USD in today’s trading. conflict with #Ukraine is taking its toll on the ruble, which has now lost up to 37.7% of its value against the USD since January 1, 2022. I am currently measuring #Russia‘s inflation at 78%/year. pic.twitter.com/wKO4hylHwA
— Steve Hanke (@steve_hanke) March 2, 2022
The Russian ruble fell to a new all-time low of 122.24 RUB/USD in today’s trading. The conflict with Ukraine is taking its toll on the ruble, which has lost up to 37.7% of its value against the USD since January 1, 2022. I currently estimate Russia’s inflation at 78% per year.
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