MOSCOW/LONDON – Russians waited outside ATMs for hours on Sunday in fear that the new Western sanctions imposed by Moscow over its invasion of Ukraine would cause cash shortages and interrupt payments.

Although Russian lenders and authorities sought to calm fears, moves to stop some Russian banks being connected to the SWIFT global payment system and to freeze Bank of Russia’s reserve are likely to cause a serious economic impact.

Everyone has run from ATM to ATM trying to obtain cash since Thursday. Pyotr, a St Petersburg resident who chose not to be identified, stated that “Some are lucky, some not so much”.

Russians were forced to wait in line for long periods of time because they were concerned that their bank cards would cease functioning or that cash withdrawals might be limited by banks.

The SWIFT decision will not allow Russian banks to communicate with their international counterparts, but analysts warn that Russia could be more costly if it limits the amount of international reserves exceeding $630 billion.

Sergey Aleksashenko (a former deputy chair of Russia’s central bank) said that Russia would soon lose its national wealth fund.

He stated that (President Vladimir Putin) and the (former Finance Minister Alexei Kudrin) built it up over years thinking about major war.” War has arrived, there is no money.”

BANKS NEED CALM

Russian banks tried to ease fears about money supply and payment system online on Sunday.

In the meantime, foreign exchange rates rose. Although the currency closed Friday at 83 dollars per dollar, rates offered by foreign exchange lenders rose to over 100 Sunday.

Russia’s largest lender, Sberbank said that it is not experiencing any disruptions in customers transactions via its payment system and those of partners. VEB, the state development bank in Russia said that it would continue to support projects inside Russia despite external restrictions.

Otkritie was rescued by the central bank 2017 and said that new restrictions will not have any significant effect beyond its use abroad of bank cards.

The central bank however advised individuals to bring their bank card with them. They said that mobile payments systems might not work with any terminals or online shops managed by the five largest banks.

Sergei from Moscow said that he’d need to get a new credit card and remember how he lived five years before he quit using cash.

“I am used to living in this 21st century without any plastic cards.” “Everything is on my phone,” he stated. I’m against it.

Andrei Klimov is a Russian senior lawmaker who was quoted as saying by RIA: “Russian’s exit SWIFT poses not threat to our internal settlements. The rouble acts as an international currency, stimulating the rouble and reducing the West’s ability to destroy our settlement operations.

CATASTROPHE

However, some economists warned that there could be severe economic consequences now that the West announced that it would freeze the reserves of the central bank.

On Twitter, former Russian Prime Minister Mikhail Kasyanov stated that “the most important thing” was that the West has frozen the Central Bank’s reserve funds. There is no currency to back the rouble. They will switch on the printing press. It is possible to see the end of hyperinflation or economic catastrophe.

Requests for information on the asset freezing were not answered by the Russian central banking on Sunday.

Roman Borisovich is a Moscow-based former investment banker who said Monday’s markets will be chaotic.

The Russian authorities will ensure that controls are in place. Although they cannot defend the ruble, the Russian authorities will likely halt all trading and fix the currency at an artificially low rate. He said that there would be a black marketplace.

On Monday, the central bank stated that its repo auction would not be restricted.

Tatiana from Moscow said that she didn’t expect to be hurt too much as she doesn’t earn much, and she believed Russians would make it through the fallout.

She stated, “We’re people who have seen many ups and falls over the years.” We will overcome it because this is a noble cause. Everything Putin does, I salute it.”