The United States, Europe and its allies are not launching missiles or sending troops to push back against Russia’s invasion of Ukraine, so they have weaponized the most powerful nonmilitary tool they have available: the global financial system.
Over the past few days, they have frozen hundreds of billions of dollars of Russian assets that are held by their own financial institutions, removed Russian banks from SWIFT, the messaging system that enables international payments, and made many types of foreign investment in the country exceedingly difficult, if not impossible.
The impact of this brand of supercharged economic warfare was immediate. By Thursday, the value of the Russian ruble reached a record low, despite efforts by the Bank of Russia to prop up its value. Trading on the Moscow stock market was suspended for a fourth day, and financial behemoths stumbled. Sberbank, Russia’s largest lender, was forced to close its European subsidiaries after running out of cash. At one point, its shares on the London stock exchange dropped to a single penny.
There’s more to come. Inflation, which is already high in Russia, is likely to accelerate along with shortages, especially of imported goods like cars, cellphones, laptops and packaged medicines. Companies around the world are pulling investments and operations out of Russia.
Article source: https://www.nytimes.com/2022/03/03/business/economy/russia-sanctions-global-economy.html
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