The West launched an unprecedented economic war against Russia over the weekend after its invasion of Ukraine.
The ruble plunged to a record low of less than 1 U.S. cent in value Monday after Russia was cut off from the global bank payments system called SWIFT (the Society of Worldwide Interbank Financial Telecommunications).
The Russian currency dropped nearly 26% to 105.27 per dollar, down from about 84 per dollar late Friday.
Over the weekend the European Commission, France, Germany, Italy, Britain, Canada, and the US imposed four additional measures they had been holding off on until then, including:
- Removing selected Russian banks from SWIFT, the global financial messaging system that enables money to travel around the world
- Agreeing to prevent Russia’s Central Bank from deploying its international reserves in ways that undermined the sanctions, crippling its ability to use foreign currency to support the ruble
- Committing to act against Russian oligarchs, specifically by limiting the sale of so-called golden passports to wealthy Russians
- Committing to freeze the foreign assets of sanctioned individuals up to and including President Putin, as well as those of their families and “enablers”.
- Levying personal sanctions on the finances of Putin, his Foreign Affairs Minister Sergei Lavrov, the rest of his Security Council, and 11 other named officials. The US says it is “exceedingly rare” to designate a head of state for such actions. Putin joins a small group of these individuals, which includes North Korea’s Kim Jong Un, Belarusian President Alyaksandr Lukashenka, and Syrian President Bashar al-Assad.
“We will also ban the transactions of Russia’s central bank and freeze all its assets, to prevent it from financing Putin’s war,” European Commission President Ursula von der Leyen said in a statement Sunday.
People rush to withdraw cash as economic war on Russia starts
Videos from Russia showed long lines of Russians trying to withdraw cash from ATMs, while the Russian Central Bank issued a statement calling for calm, in an effort to avoid bank runs.
Russian citizens are trying to prevent their ruble-based savings from vaporizing in Russia’s banks. This drives them to withdraw their cash en masse and quickly try to convert it to more stable currencies, such as the dollar, the euro, gold, or even cryptocurrencies.
Reports also showed that Visa and Mastercard were no longer being accepted for those with international bank accounts.