"The European Central Bank is its most powerful weapon in the face of the Russian invasion of Ukraine, asking:" Will Putin be able to recover from the sanctions? "..
The site added that it is translated by "Arabi 21", that the central bank’s penalties are so strict that they are destroyed, and the only question is “whether these sanctions may lead to much superior damage that Western governments may wish for.”.
He continued that Putin launched his war against Ukraine partly because he wants to confirm the situation of Russia as a superpower, that is, it is a war of which is to restore the great position of Russia.But it seems that he did not realize that violence is one form of strength, and that it is not the most impressive factor in the end.
Next, the article translated by "Arabi 21":
The European Commission announced that the European Central Bank is famous for its most powerful financial weapon in the face of the Russian aggression.Foreign Minister Anthony Blinkkin announced that the Federal Reserve will impose its own sanctions on the Russian Central Bank.The central bank’s penalties are so strict that they are destroyed, and in fact the only remaining question is whether these sanctions will lead to damage to much superiority that Western governments may wish for..This is because it can lead to the bankruptcy of the Russian banking system and the transformation of the ruble, the Russian currency, into a currency without value.Russia will receive a blow that will partially investigate the Swift regime.Swift is a correspondent technology that is based in Belgium, which allows banks to communicate with each other in safe ways, and enables them to make financial transfers electronically securely and securely.Swift is not a bank, nor is it exactly a system for paying payments, but rather a way to ensure the transfer of money to where it is supposed to be.What is happening to the countries that are excluded from Swift, as happened with Iran in 2012, is that they are already forced to return to the pre -computer era - so they are forced to rely on primitive transactions based on barter, or on Balt from the monetary currency, to finance its governments and run its economy.In order to better understand the possibilities received with Michael Bernestam, an economist and analyst born in the Soviet Union and is now working at the Hoover Bastanford Institute.Bernestam studied the potential impact of such sanctions since the former Russian invasion of Ukraine in 2014.
Also read: The penalties for Moscow represent a test of the Russian -Chinese relations that carry me and I walk you through some banking and critical technologies, and I promise that the final destination deserves the trouble.Suppose you are a Russian company that buys goods from the outside world and sells them to the Russians..How exactly is done?Well, the owner of the Russian company or the Russian citizen may convert the ruble that he gains inside Russia into a foreign currency through a Russian bank.Or, given that the ruble has a tendency towards the loss of its value against the foreign currency - the owner of that Russian company or that citizen may open an account in a Russian bank in the euro or in dollars, and both of the two are legal in Russia after the era of communism.Most of these transfers from the ruble to the foreign currency are made via the computer clicks and the result is the restriction of the amount as a creditor or debtor in the electronic records of the financial institutions.Deposit in the bank is a click.And the sale of the ruble against the euro or the dollar is another click.The arrival of the foreign currency to the Russian customer account is another additional click.It is rare for an exchange of banknotes in these transactions.Almost only $ 12 billion in the form of banknotes in dollars or euros inside Russia, according to the research conducted by Bernastam.In return, the Russian private sector demands for foreign currencies from Russian banks amount to $ 65 billion, as Bernastam told me.As for the Russian -owned Russian companies, they accumulated more demands than that of foreign exchange reserves in Russia.Despite the relative scarcity of foreign banknotes inside Russia, all these clicks can be made because Russia in general has confidence that banks are able to provide foreign exchange if they have to do so.If every Russian deposit - an individual, company or state -owned institution - came at the same time to demand their currencies in dollars or euros, then a classic stampede will be expected to withdraw the currency.
However, the Russians do not defend their banks because they believe that in any real crisis, the Russian Central Bank will provide the required cash..This is because the Russian Central Bank has huge amounts of reserves: 630 billion dollars, according to the last census before the current war on Ukraine began.In the case of emergency, the central bank will withdraw from its reserves and provide commercial banks with criticism, and each deposit can obtain its full dues in the currency that deposited it..With 630 billion dollars of reserves, it cannot be imagined that Russia is free from foreign currencies.Perhaps you have read this claim many times during the past few days.I even wrote this claim in an article published for me last week.However, Bernestam says: On your messengers, do not hurry.What does Russia have to have Sin or Sacad from foreign reserves?Where are these reserves?The dollars, euros and pounds owned by the Russian Central Bank - may be owned by Russia, but Russia does not control it.Almost all these hundreds of billions owned by the Russians controlled by foreign central banks.Russia's reserves are located in the form of blogs in central bank records in the West, especially with the European Central Bank and the Federal Reserve.Most of Russia's reserves owe to the Russian Central Bank Western governments.Do you remember the saying, "If you are a debtor of the bank with ten thousand dollars, you have a problem - but if you owe the bank ten billion dollars, the bank has a problem?"We are the peoples of the Western world, we owe the Russian state hundreds of billions of dollars.That is not our problem, it is the problem of Russia, and it is a huge problem.Because the only thing that any debtor can do is not to pay if he is asked to do so.In order for her to finance its war in Ukraine, Russia may have hoped to withdraw the foreign currency reserves it needs from the central banks in the West..What is supposed to happen is that the Russian Central Bank requests the Federal Reserve or from the European Central Bank to transfer Sen from billions in dollars or in the euro from the Russian Central Bank to this or that private bank or that.In turn, the private bank will provide the accounts of Russian companies or Russian individuals.Then these companies or those individuals pay their obligations to the Western companies they owe to them.All of this requires the cooperation of the Federal Reserve or the European Central Bank in the first place.The Federal Reserve or the European Central Bank can say: "No, sorry.Russian Central Bank funds frozen.You will not be able to transfer any dollars or Euros from the Russian Central Bank to commercial banks, and you will not be able to make remittances from commercial banks to institutions and companies or to individuals.For all practical ends, you have been bankrupt."This will be an amazing procedure, but it will not be an unprecedented action.This did the United States with Iran after the revolutionary regime took the American diplomats in 1979.
Also read: NYT: Putin faces sanctions, but its origins are still a mystery, but Iran did not feel the coldness of isolation because it was reaping huge quantities of foreign currency thanks to oil sales.But if Russia's income of foreign currencies slows down at the same time that it launches a high -cost war against Ukraine, it will be in need of its reserves..Suddenly, the situation will be similar to if the money suddenly disappeared.Every Russian individual or entity belonging to the state with foreign currency obligations will be completely bankrupt.Of course, a long time before this happens, everyone who has to do with these transactions will affect.The depositors will compete to withdraw their savings in dollars and the euro from Russian banks, and Russian banks will address the doors of the Russian Central Bank, and the Russian Central Bank will freeze the accounts of foreign currencies..The ruble will not return a convertible currency.It will return to what it was in the Soviet era, that is, a fake currency that is sometimes used for the purposes of book accounts inside Russia, but it has no ability to buy goods or services from global markets.The Russian economy will be exempt from itself, and it collapses to a level that does not exceed self -sufficiency in a country that produces only basic commodities.Russia imports almost everything its citizens need to eat, dress and use.In a modern digital world, this money cannot be used without the approval of a central bank belonging to a country.You can call that Bernstam Law, and its text: "Do not fight a war with countries that use their currencies as a backup currency in order to maintain your currency."There is a single exception to the base using reserves as blogs: there are approximately 132 billion dollars of Russian reserves in the form of actual gold in treasures inside Russia.Russia can mortgage or sell that gold, but for whom you will mortgage or sell it?Most of the potential customers who may beg themselves to buy Russian gold can be threatened with sanctions.Those who are likely to find in themselves the ability to challenge the threat do not have what they buy many of that gold.Take, for example, the entire GDP of a country like Venezuela, does not exceed approximately $ 480 billion.There is only one customer who reaches richness, which enables him to buy a large amount of gold from a country subject to sanctions like Russia, and that customer is China.But will China agree to take it?And if China agreed to this, would it not require a significant and painful reduction in exchange for its assistance to a seller in a severe crisis such as Russia, which is subject to sanctions?How exactly will the deal be completed?Will China be satisfied with the legitimate owner of gold, leaving the metal inside the Russian treasury?That is doubtful.The value of one ton of gold is approximately 61 million dollars, and thus an oven is $ 139 billion in gold, which will weigh approximately 2290 metric tons..It can be imagined that a locomotive traces a train that carries that weight and transferred it from Moscow to Begin.But this will require a huge logistical and security effort in order to download and then download and secure gold on a transit train for Siberia.What will be achieved by such a move?Russia currently has property inside China in Chinese currency, Renminbe, worth $ 84 billion.If the assigned assets within China were real benefit, Russia would not need to sell gold to China in the first place.It will surely be able to use Russia's reserves from Chinese Rabnminbe to buy goods from China, but that will not solve the real problem, which is not to buy certain goods from certain places, but rather to maintain the ruble as a currency that has the confidence of the people of Russia themselves.China will not be able to ensure this for Russia, but rather the central banks in the West are the ones that can ensure this.Here we reach the limits of what the penalties imposed by the central banks can be completed as financial weapons: the weapon that crushes the banking system of the opponent may become stronger than required.This is because the West wants to impose criminal sanctions that would impose on Russia to change its aggressive behavior, but without the matter to destroy the Russian economy.The central bank weapon of power may actually raise Putin's ire and push him towards committing a more severe aggression as a desperate last gambling.Here comes the following question: Is there a way to gradually use the Central Bank sanctions weapon?Perhaps there is a way.Western banks do not need to freeze the accounts of the Russian Central Bank once.It can allocate the Russian Central Bank a monthly expense that does not exceed a few billion per month.This will keep Russia in a state of lameness, under severe restrictions - in a case similar to the difficulty of breathing rather than sudden strangulation.The West will not be able to prevent Putin from spending its foreign currencies on his war or preventing its abdomen from the process of distributing the foreign currency..However, restrictions will quickly reveal the terrible cost of Putin's decisions and make them more visible and faster for each sector of strength and influence within Russian society.This will not be a knockout, but it may cause enough pain, and of course the knockout can be lower against him at a later time.In addition, the sanctions tool will be directed by the Central Bank, a lesson for Putin, which is still needed..Putin has partially launched his war against Ukraine because he wants to emphasize Russia's situation as a great power - that is, it is a war of which is to restore the great position of Russia.But it seems that Putin did not realize that violence is one form of strength, and that it is not the most impressive factor in the end.Even energy production has its limitations.The power that Putin is about to feel is the strength of the producers in the face of gangsters, the power of governments that give confidence in the face of governments that govern terror.Russia depends on the dollar, on the euro and the British pound and other cash currencies in ways less within the circle surrounding Putin who has the ability to understand it.The liberal democracies that created these reliable currencies are to force the lining of Putin to feel what they have not incurred yet..Storm them.
