Video footages of long queues in front of ATMs in Russia emerged over the weekend, indicating that people fear that they would soon be unable to withdraw cash as more and more sanctions against their country are imposed. Many ATMs have already run out of money and people are desperately queuing up in front of those which still are operational.
The video footages emerge as European Central Bank (ECB) on Monday warned that Sberbank, the European subsidiary of Russia's state-owned bank, is facing bankruptcy in the wake of sanctions imposed on Russia for invading Ukraine. Experts have warned that the West's announcement to freeze the central bank's reserves will cause catastrophic economic damage.
Panic at ATMs
Long queues were seen outside of ATMs across Moscow on Sunday, as people panicked that they would soon run out of cash due to the West's sanction on Russia. Video footage at one ATM shows cash drying up after 40 minutes, leaving people stranded.
Another footage shows people standing in a long queue as they waited to withdraw cash before the ATM goes empty. This was the seen at all ATMs across Russia on Sunday, with video footages of the scenes flooded on social media.
According to a Financial Times report, the queues started building up form Thursday itself when Russia announced war against Ukraine and search for cash continued through the weekend, with more than half of the ATMs now having run out of cash.
The panic began as EU countries agreed on measures to limit the ability of the Russian central bank to use its foreign currency reserves and to cut off some Russian lenders from the Swift global payment system.
"Since Thursday, everyone has been running from ATM to ATM to get cash. Some are lucky, others not so much," St. Petersburg resident, Pyotr, who declined to give his last name, told Reuters.
Big Economic Blow?
Although Russian authorities and lenders sought to calm down the citizens, moves to ban some Russian banks from the SWIFT global payments system and freeze the Bank of Russia's reserves are expected to have a significant economic impact.
According to Sergey Aleksashenko, a former deputy head of the Russian central bank who now lives in the United States, Russia's national wealth fund will completely vanish. "(President Vladimir) Putin and (former Finance Minister Alexei) Kudrin built it up for years, thinking about a major war," he said. "War has come, and there is no money."
Menawhile, the ECB on Monday said that Sberbank, is facing bankruptcy and can fail anytime. Sberbank Europe AG, which is headquartered in Austria and has branches in Slovenia and Croatia, has "experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions", the ECB said.
"The European Central Bank (ECB) has assessed that Sberbank Europe AG and its two subsidiaries in the banking union, Sberbank d.d. in Croatia and Sberbank banka d.d. in Slovenia, are failing or likely to fail owing to a deterioration of their liquidity situation," the ECB said in a statement.
Sberbank and VTB, Russia's two largest banks, were hit with harsh US sanctions on Thursday, limiting their ability to do business worldwide.
Amid all these panic and sanctions, Russia's central bank on Sunday tried to reassure markets and depositors by offering to provide banks with rouble liquidity on a continuous basis, with no restriction on the amount they may borrow. It also said that it would "significantly expand" its so-called Lombard list of securities that it would accept as collateral to help banks meet their refinancing demands.
Despite the assurances, the long queues outside the ATMs give the real picture of situation. Many are concerned about the impact of such withdrawals on the banking system. "Their cash withdrawals are damaging Russia, and the banks' liquidity is dropping," a senior executive at a western bank in Moscow stated.
Sanctions on the central bank limit its capacity to intervene in foreign exchange markets, which it had previously used to keep the rouble stable and prevent it from falling into free float and collapsing.