The Russian financial system is booming as the United States faces recession
Russia’s financial system is thriving despite tough sanctions, according to the International Institute of Finance.
Deputy Chief Economist Elina Ribakova describe in a Twitter thread how Russia’s huge oil and gas revenues had a positive impact on the Russian financial system, even after Western countries cut Russia off from other global financial markets in response to its invasion of Ukraine in february. Meanwhile, Americans face a looming recession and rising energy prices at home.
“Those who thought that cutting off funding to Russia for a few weeks at the start of the war would stop the war have proven naive,” she said, displaying data from the International Institute of Finance that shows a significant increase liquidity of Russian assets since March. .
1/ The Russian financial system is back to status quo after a few weeks of violent bank runs (nearly 10,000 billion rubles of cash withdrawn). Those who thought that cutting off funding from Russia for a few weeks at the start of the war would stop the war have been naive. pic.twitter.com/NPhE14Fpu2
— Elina Ribakova 🇺🇦 (@elinaribakova) June 23, 2022
The Russian ruble surged in May; it is now one of the strongest currencies in the world versus the US dollar, according to Business Insider. However, some experts argued that this was not necessarily a good thing for Russia.
“So the strong ruble only reflects the fact that there is no use of foreign currency in Russia at the moment,” political scientist Ilya Matveev said. Told NPR. “And that is, of course, a very bad thing for the economy.”
Mateev also pointed out that Russia is experiencing significant inflation, supply shortages and soaring prices – things the United States is also facing. U.S. consumer prices hit a 40-year high in May and GDP growth slowed faster than Biden administration officials had expected.
US President Joe Biden has accused Putin of causing inflation and a rise in gas prices, but many Americans don’t believe his explanation.
Russia operates with a budget surplus of around 1.6 trillion rubles, having accumulated more than $100 billion in foreign exchange reserves since invading Ukraine in February, according to Ribakova. (RELATED: Russia Cuts Gas Flows to Europe, Blames Sanctions)
Russia by default on about $100 million in debt on Sunday after sanctions prevented him from repaying U.S. dollar and euro debts to foreign creditors, Reuters reported.
US officials have called the default a consequence of economic measures the United States and its allies have taken to disrupt Russia’s economy.
“The news this morning around the discovery of Russia’s default, for the first time in more than a century, situates just how strong the actions the United States, along with its allies and partners, have taken, as well as the dramatic impact on Russia’s economy,” a U.S. official said at the G7 summit on Sunday, Reuters reported.
G7 leaders too offers sanctions on Russian gold exports and a cap on oil prices at the meeting, according to Reuters.
Ribakova versus, saying the short-term effects of a default are “not very significant” in an interview with Marketplace in March. It would take time for the most serious consequences to materialize, she explained.
Ribakova could not be reached for comment by the Daily Caller News Foundation.
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