The Kremlin has recently stated that the Russian Federation’s banking system is somewhat “insured” against the crisis unfolding in the United States, thanks to the sanctions imposed by the West.
Since February 2022, Treasury has implemented more than 2,500 sanctions in response to Russia’s war of choice, according to the U.S. Department of Treasury.
Dmitry Peskov, the press secretary of the Russian President, highlighted that Russia’s banking system is largely shielded from the negative effects of the U.S. crisis due to the country’s limited connections with the international financial system.
Peskov explained to reporters, “Now there is practically no [connection], because our banking system, of course, has, let’s say, certain connections with some segments of the international financial system, but is mostly under illegal restrictions, again introduced by the collective West.”
Therefore, there is no silver lining. Here, to some extent, we are insured against the negative impact of the crisis that is now unfolding overseas,” the press secretary went on to say.
This statement follows the recent announcement of the bankruptcy of the 16th largest U.S. bank, Silicon Valley Bank (SVB), on Mar 10, marking the largest bank bankruptcy in the United States since the 2008 financial crisis.
However, the White House claims that the current situation in the American banking sector is not a repeat of the 2008 crisis.
Russia’s unique position in the international financial system, as a result of the Western sanctions, may offer some protection against the spillover effects of the U.S. banking crisis.
Meanwhile, European markets have also suffered major losses, with shares of numerous prominent banks falling steeply.
The European Union has imposed massive and sanctions against Russia, banning over €43.9 billion in exported goods to Russia and €91.2 billion in imported goods.
A key factor in the European market decline appeared to be Credit Suisse, the Swiss bank that has faced ongoing struggles to recover its fortunes due to mistakes and customers shifting their assets to competitor banks.
The bank’s shares plunged over 20%, setting a new record low.
On Wednesday, Saudi National Bank, Credit Suisse’s largest shareholder, dismissed the possibility of providing additional funds to support the struggling bank and its latest turnaround plan.
The dramatic fall in Credit Suisse’s shares led to temporary trading halts. Shares of other major banks such as France’s Société Générale and BNP Paribas dropped about 10%, Germany’s Deutsche Bank declined 8%, and Britain’s Barclays lost 7%.