On the 28th of December 2022, Anders Aslund, an economist and author, went on Twitter to share that there were reports of a bank run by Russian citizens after the CBR governor released plans to convert their savings to war bonds.
Reports of widespread emptying of cash at Russian bank ATMs. Apparently, the reason is this instruction by CBR governor Nabiullina to transform private individuals' bank deposits to war bonds by force, effectively confiscating bank savings. Comments? @sguriev @v_milov pic.twitter.com/NbiWiwfzjt
— Anders Åslund (@anders_aslund) December 28, 2022
The Central bank of Russia’s president, Elvira Nabiullina, has introduced some needed capital controls and increased the interest rate to 20% in retaliation to the harmful effects of the sanctions Russia faces over their invasion of Ukraine.
The European union and united states governments made moves to ban most Russian banks from the global swift payment system, cutting their access to conducting international transactions worth trillions of Russian rouble.
To make things worse, they also struck a heavy economic blow by blocking Russia’s ability to liquidate the $630 billion worth of foreign reserves stockpiled to protect their economy.
Due to these recent developments, the rouble has been losing value drastically. Rumors started to spread that the government aimed to confiscate their savings, issuing them government bonds with higher interest against their will. The reason was to raise funds for the war efforts.
That has resulted in an alleged bank run, with long queues and Russians desperate to pull out their funds before they can be confiscated. Some banks refused to give customers their money in some parts of Russia and blocked debit cards from working in certain ATMs.
In response to Anders Aslund’s tweet, many users who claimed to be Russian citizens claimed that his information was false, as the bank runs due to the festivities and citizens moving to spend time with their relatives.
Others claimed that fiat confiscation was possible but not feasible since the government could still borrow, just not in huge sums. Secondly, there were still enough funds in the war chest as Russia was gearing up for the sanctions ahead of time.
And though the Ukraine invasion has ushered a lot of negatives, the sanctions have convinced the Russian government to warm up to the idea of cryptocurrencies. Since crypto is a low-cost and anonymous way of sending and receiving payments, and it threatens the US hold on global finances, the Russian government has made moves to create a digital rouble.
It aims to revolutionalize its current financial system and increase its standing on the global level. Thus it plans to fund efforts to provide power for crypto-mining farms in Kazakhstan.