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With $600bn of foreign reserves, they can easily prop up the Ruble, if they want to.
by sgjohnson 5y ago
With $600bn of foreign reserves, they can easily prop up the Ruble, if they want to.
- rad_gruchalski 5y agoLarge chunk of those reserves is now frozen. They can’t do much about it.
- 323 5y agoThey have 20% of reserves in gold. Gold can easily be used as collateral to get dollars.
- JumpCrisscross 5y ago> Gold can easily be used as collateral to get dollars At a deep discount. The buyer would run the risk of secondary sanctions by the U.S. They would also, likely, want to take custody, all of which can result in striking discounts. (I beliece Iran got dimes on the dollar for their gold.)
- slaw 5y agoChina is not afraid of U.S.
- neoromantique 5y agoChina is indeed afraid of U.S. https://www.bloombergquint.com/global-economics/chinese-state-banks-restrict-financing-for-russian-commodities https://www.bloombergquint.com/global-economics/chinese-stat...
- bcrosby95 5y agoRegardless, using human emotions in geopolitical discussions is weird. I don't think China is afraid of the US, I think China is doing what China thinks is best for them, which may include going along with the US, or not, or doing something inbetween (most likely).
- kristianov 5y agoYour evidence does not support your argument. These moves can also be considered as strengthening the globalization of CNYuan.
- JumpCrisscross 5y ago> China is not afraid of U.S. It’s almost explicitly Western policy at this point that Russia would be better a Chinese vassal than regional power. If Putin winds up dependent on Beijing, that isn’t great, but it’s better than the current situation.
- stjohnswarts 5y agoUS is not afraid of China.
- voidfunc 5y agoChina doesn't also really seem to want any part of this drama. They're being dragged in because historically they're an ally of Russia but really at this point China has to view Russia as a liability to its own long term ambitions.
- adventured 5y ago> China doesn't also really seem to want any part of this drama. They're being dragged in because historically they're an ally of Russia Historically China is a quasi enemy of Russia. Russia was plotting to nuke China in 1969 over their border conflict. They have rarely liked eachother and are not traditional allies. https://en.wikipedia.org/wiki/Sino-Soviet_border_conflict https://en.wikipedia.org/wiki/Sino-Soviet_border_conflict https://www.scmp.com/article/714064/nixon-intervention-saved-china-soviet-nuclear-attack https://www.scmp.com/article/714064/nixon-intervention-saved...
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- ceejayoz 5y agohttps://www.theatlantic.com/ideas/archive/2022/02/how-russian-sanctions-work/622940/ https://www.theatlantic.com/ideas/archive/2022/02/how-russia... > There is one exception to the rule about reserves as notations: About $132 billion of Russia’s reserves takes the form of physical gold in vaults inside Russia. Russia could pledge that gold or sell it. But to whom? Most potential customers for Russian gold can be threatened with sanctions. Those who might defy the threat couldn’t afford to take very much: The entire GDP of Venezuela, for example, is only about $480 billion. > Only one customer is rich enough to take significant gold from a sanctioned nation like Russia: China. > Would China agree to take it? And if China did agree, would it not demand a big and painful discount for helping out a distressed seller like a sanctioned Russia? How exactly would the transaction occur? Would China be content merely to take legal ownership of the gold and leave the metal inside in a Russian vault? Doubtful. One ton of gold is worth about $61 million, so $139 billion would weigh about 2,290 metric tons. It’s certainly conceivable for a locomotive to pull a train of that weight from Moscow to Beijing. But it would constitute a considerable logistical and security undertaking to load, move, unload, and secure the gold for a train trip across Siberia. China's abstention at the Security Council vote indicates this might not be an enormously viable option, too.
- bobsmooth 5y ago>It’s certainly conceivable for a locomotive to pull a train of that weight from Moscow to Beijing. But it would constitute a considerable logistical and security undertaking to load, move, unload, and secure the gold for a train trip across Siberia That sounds like a great setup for a heist movie.
- m4rtink 5y agoRound 2 ? ;-) https://en.m.wikipedia.org/wiki/Czechoslovak_Legion#Capture_of_imperial_gold_reserve https://en.m.wikipedia.org/wiki/Czechoslovak_Legion#Capture_...
- ethbr0 5y agoThe Great Train Robbery (1978) In which a British gentleman (of a sort) decides to steal the gold being transported to pay British soldiers fighting the Russians in Crimea. Mostly because, eh, it seems like a challenge. Written and directed by Michael Crichton. Starring Sean Connery, Donald Sutherland, and Lesley-Anne Down. https://m.imdb.com/title/tt0079240/ https://m.imdb.com/title/tt0079240/
- hkmaxpro 5y agohttps://www.theatlantic.com/ideas/archive/2022/02/how-russian-sanctions-work/622940/ https://www.theatlantic.com/ideas/archive/2022/02/how-russia... Gold is still difficult to sell with sanctions. > Russia could pledge that gold or sell it. But to whom? Most potential customers for Russian gold can be threatened with sanctions. Those who might defy the threat couldn’t afford to take very much: The entire GDP of Venezuela, for example, is only about $480 billion. > Would China be content merely to take legal ownership of the gold and leave the metal inside in a Russian vault? Doubtful. One ton of gold is worth about $61 million, so $139 billion would weigh about 2,290 metric tons. It’s certainly conceivable for a locomotive to pull a train of that weight from Moscow to Beijing. But it would constitute a considerable logistical and security undertaking to load, move, unload, and secure the gold for a train trip across Siberia.
- cdiddy2 5y agoI know it isn't your article but according to wikipedia the estimated gdp of venezuela is 42B. It was 480 or so in 2014 https://en.wikipedia.org/wiki/Economy_of_Venezuela https://en.wikipedia.org/wiki/Economy_of_Venezuela
- ceejayoz 5y agoHoly shit.
- MetricExpansion 5y agoIndeed. Is this the fate that Russia is facing, or are the sanction not enough for this to happen?
- stefan_ 5y agoWho is going to be the counterparty? There are sanctions.
- sgjohnson 5y agoI was thinking China, but it seems like China doesn’t give a shit about Russia’s self-created problems.
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- stjohnswarts 5y agoIf you find a trading partner...
- thisisnico 5y agoCanada, US, UK, and more are blocking their ability to withdrawal foreign reserves.
- spideymans 5y agoIf Russia's foreign reserves are stored in foreign banks, access to those reserves can also be limited via sanctions
- JumpCrisscross 5y ago> If Russia's foreign reserves are stored in foreign banks, access to those reserves can also be limited via sanctions All reserves not physically held are subject to sanctions. And the Russian central bank is being sanctioned by the U.S. and Europe.
- naveen99 5y agoI wonder why Russia didn’t dump its foreign reserves before invading Ukraine. I wonder how much more than $600 billion is Ukraine worth to Russia.
- ceejayoz 5y agoJust a couple days ago it looked unlikely SWIFT would be involved. It's very possible Russia didn't expect magnitude of the sanctions being applied at all.
- naveen99 5y agoWith US dollar reserves and gold being hard to use for Russia, I would think Russia and China will learn the value of self custody and self mining of cryptocurrency. The other alternative is to reinvest the money in real time inside their own borders: maybe build a few semiconductor fabs ?
- rwaksmunski 5y agoThey expected their puppet government to be in place in under 72 hours.
- ceejayoz 5y agoMaybe not. https://www.theatlantic.com/ideas/archive/2022/02/how-russian-sanctions-work/622940/ https://www.theatlantic.com/ideas/archive/2022/02/how-russia... > Not so fast, argues Bernstam. What does it mean that Russia “has” X or Y in foreign reserves? Where do these reserves exist? The dollars, euros, and pounds owned by the Russian central bank—Russia may own them, but Russia does not control them. Almost all those hundreds of billions of Russian-owned assets are controlled by foreign central banks. Russia’s reserves exist as notations in the records of central banks in the West, especially the European Central Bank and the Federal Reserve. Most of Russia’s reserves are literally IOUs to the Russian central bank from Western governments.
- Bayart 5y agoIt seems a significant part of it has already been frozen. And if they want to sell their gold, they'll need to find someone to buy it in a real currency (not yuan).
- rntn 5y agoDepending on how quickly the West takes action against the major Russian banks and their central bank, they may have trouble defending the Ruble much. "The United States and its allies on Saturday said they will limit Moscow’s ability to use a large chunk of its foreign-currency reserves and kick some of the country’s banks out of the SWIFT payment system in what looks like a deliberate attempt to undermine confidence in Russia’s financial system" https://www.reuters.com/markets/asia/sanctions-shock-and-awe-reverberates-beyond-russia-2022-02-27/ https://www.reuters.com/markets/asia/sanctions-shock-and-awe...