A senior Russian bank official says his country is still facing the real impact of sanctions

A senior banking official in Russia admitted this week that sanctions have pushed the economy to the brink as the country tries to maintain some semblance of stability.

Bank of Russia President Elvira Nabiullina presented the bank’s annual report for 2021, detailing the country’s economic recovery from the impact of the pandemic. She went on to describe the devastating impact of Western sanctions on the country in the wake of its invasion of Ukraine.

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“First of all, sanctions against Russia affected the situation in the financial sector, stimulated demand for foreign currency and caused the sale of financial assets, cash outflows from banks, and an increase in demand for goods,” Nabiullina said in prepared comments. . Moreover, the risks to financial stability have increased.

The ruble regained its lost value since the beginning of the invasion, as the dollar was worth about 77.38 rubles as of Saturday. The exchange rate before the invasion saw one dollar equal to approximately 83.53 rubles, and its peak was about 139 rubles.

Nabiullina credited the recovery to several measures taken by the bank to mitigate risks, including interest rate hikes, capital controls, a nearly month-long suspension of trading, support for bank borrowers and subsidized lending programs for small businesses.

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She said companies will need to continue adapting in order to combat sanctions, including finding “new partners” and “new logistical methods” to deliver products.

“At the moment, this problem may not be acute because the economy still has stocks, but we can see that sanctions are being tightened almost every day, including restrictions on the transportation of Russian goods and the operation of Russian tankers,” Nabiullina admitted. “However, the period in which the economy can keep pace with stocks is limited.

“The sanctions have affected the financial market, but now they will begin to affect the real economy increasingly,” she added.

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Economists previously told FOX Business in Russia that Russia’s recovery is temporary and that it will suffer increasingly as the West continues to tighten sanctions.

“This is an ongoing process,” Anthony Kim, an economic freedom researcher at the Heritage Foundation, told Fox Business Network. “Right now, as markets process more and more information, we are seeing the conflict drag on instead of really getting more intense and more negative. But that is not the end result.

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“There was an immediate shock or reaction from the Russian market and markets outside Russia, which is why we saw this immediate legitimate panic and legitimate stagnation,” Kim explained. “And what we are in now is a different kind of period.”