4 ms·

This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. I don't think situati

This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. I don't think situation like this ever happened before. Actually if I think about it it's even worse. It's a person who goes to bank to pay off his debts but bank refuses to take their money and forecloses the house as well as confiscates property. I know, I know. The Russian government is doing atrocious things but this "forced default" could actually have negative consequences. Who would trust this bank in the future?

threeseed 4y ago
I think it's more a case of a person going to bank to pay off their debt and offering them gold instead of dollars which the bank refuses. But all of the gold buyers don't want to deal with you because you're a criminal.
- deleted 4y ago
  [deleted]
- kstrauser 4y ago
  I think it’s closer to taking out a loan in gold and offering to pay it back in Schrute Bucks. Lenders want to be repaid in the agreed currency. (Also, if you don’t have access to the agreed currency because you invaded another country and are committing war atrocities, and no one will do business with you, then sucks to be you.)
deleted 4y ago
[deleted]
number6 4y ago
> However, none of the underlying bonds have terms that allow for settlement in the local currency. > This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. The bank wanted to be payed in BTC but you offered LUNA instead. Even if you had the Dolar amount in LUNA token, for your debt, who would swap theese for BTC?
chii 4y ago
> Who would trust this bank in the future? the trust would have already been eroded in some parts from financial sanctions of this magnitude. This is why using financial system as a weapon of politics (or war) is fraught with danger. Sure, for this situation, it might be the best option short of a shooting war, but countries that currently rely on the US financial system would be smart to think of strategies to diversify themselves. This diversification will take away financial prowess from the US, and remove some of that wealth associated with such prowess.
- romanovcode 4y ago
  >This diversification will take away financial prowess from the US, and remove some of that wealth associated with such prowess. Yeah, this was exactly my point. Warmonger or not, everyone likes to store their assets in dollars. After this - they'd think twice.
  - jacquesm 4y ago
    The better solution would be not to start wars.
- tablespoon 4y ago
  > This is why using financial system as a weapon of politics (or war) is fraught with danger. Sure, for this situation, it might be the best option short of a shooting war, but countries that currently rely on the US financial system would be smart to think of strategies to diversify themselves. This diversification will take away financial prowess from the US, and remove some of that wealth associated with such prowess. But that diversification was probably going to eventually happen anyway, so it could be foolish to refrain too long from using the "weapon" of financial system sanctions, since eventually they would become useless even if it's never used. IMHO, the era of globalization is over, so every power is going to pull back (at least a little) and setup defenses where they're dependent on adversaries. For countries like Russia and China, that means creating alternatives to the Western financial system; for the West that means pulling manufacturing back from China. This may be an area where the West is at a disadvantage, due to democracy and stronger ideological commitments to free markets. An Authoritarian can make a decision to protect a longer term goal and tell her population to suck up the short-term consequences (e.g. higher prices), but a Democrat may just get kicked out of power in favor of someone who will ignore the long-term risks to avoid the short-term costs.
parkingrift 4y ago
Took out a loan in dollars and agreed to pay it back in dollars. Yes I agree I don’t think anyone has ever before tried to repay a loan with monopoly money.
justinnf 4y ago
Actually, from what I read its a little worse-- they've made the payment to a european bank and that bank hasn't distributed the funds. It's not clear why they haven't but its most likely sanction related. While it was not explicitly stated in what I read, it sounded like the bank was some sort of make-shift stand-up to convert rubles to euros and dollars to work around the sanctions issue. So, it's more like you go to the bank on the 25th to make your payment due on the 30th and then the bank just doesn't pay the bill, forecloses the house and confiscates the property-- all the while putting out press releases about how you defaulted. EDIT: I just looked it up, the bank in question is Euroclear and isn't something specifically setup for this. It sounds like Russia always paid in Rubles and they paid that to Euroclear who then distributed the payments in whatever currency the bonds and such were held in, but due to sanctions they're no longer doing that. So Russia is paying the bill, the middle man just isn't distributing it due to the sanctions. My understanding of them always having paid in rubles might be incorrect, but it sounds like managing those nuances is what the purpose of the bank is.
tablespoon 4y ago
> This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. Yeah, I'm no fan of the Russian government or what it's doing, but this is always going to be "Russia defaults* on Foreign Debt" (with an asterisk). There are too many external factors that were deliberately trying to force this outcome through unusual means for it to be an unqualified default.

threeseed 4y ago

I think it's more a case of a person going to bank to pay off their debt and offering them gold instead of dollars which the bank refuses. But all of the gold buyers don't want to deal with you because you're a criminal.

deleted 4y ago
[deleted]
kstrauser 4y ago
I think it’s closer to taking out a loan in gold and offering to pay it back in Schrute Bucks. Lenders want to be repaid in the agreed currency. (Also, if you don’t have access to the agreed currency because you invaded another country and are committing war atrocities, and no one will do business with you, then sucks to be you.)

deleted 4y ago

[deleted]

number6 4y ago

> However, none of the underlying bonds have terms that allow for settlement in the local currency. > This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. The bank wanted to be payed in BTC but you offered LUNA instead. Even if you had the Dolar amount in LUNA token, for your debt, who would swap theese for BTC?

chii 4y ago

> Who would trust this bank in the future? the trust would have already been eroded in some parts from financial sanctions of this magnitude. This is why using financial system as a weapon of politics (or war) is fraught with danger. Sure, for this situation, it might be the best option short of a shooting war, but countries that currently rely on the US financial system would be smart to think of strategies to diversify themselves. This diversification will take away financial prowess from the US, and remove some of that wealth associated with such prowess.

romanovcode 4y ago
>This diversification will take away financial prowess from the US, and remove some of that wealth associated with such prowess. Yeah, this was exactly my point. Warmonger or not, everyone likes to store their assets in dollars. After this - they'd think twice.
- jacquesm 4y ago
  The better solution would be not to start wars.
tablespoon 4y ago
> This is why using financial system as a weapon of politics (or war) is fraught with danger. Sure, for this situation, it might be the best option short of a shooting war, but countries that currently rely on the US financial system would be smart to think of strategies to diversify themselves. This diversification will take away financial prowess from the US, and remove some of that wealth associated with such prowess. But that diversification was probably going to eventually happen anyway, so it could be foolish to refrain too long from using the "weapon" of financial system sanctions, since eventually they would become useless even if it's never used. IMHO, the era of globalization is over, so every power is going to pull back (at least a little) and setup defenses where they're dependent on adversaries. For countries like Russia and China, that means creating alternatives to the Western financial system; for the West that means pulling manufacturing back from China. This may be an area where the West is at a disadvantage, due to democracy and stronger ideological commitments to free markets. An Authoritarian can make a decision to protect a longer term goal and tell her population to suck up the short-term consequences (e.g. higher prices), but a Democrat may just get kicked out of power in favor of someone who will ignore the long-term risks to avoid the short-term costs.

parkingrift 4y ago

Took out a loan in dollars and agreed to pay it back in dollars. Yes I agree I don’t think anyone has ever before tried to repay a loan with monopoly money.

justinnf 4y ago

Actually, from what I read its a little worse-- they've made the payment to a european bank and that bank hasn't distributed the funds. It's not clear why they haven't but its most likely sanction related. While it was not explicitly stated in what I read, it sounded like the bank was some sort of make-shift stand-up to convert rubles to euros and dollars to work around the sanctions issue. So, it's more like you go to the bank on the 25th to make your payment due on the 30th and then the bank just doesn't pay the bill, forecloses the house and confiscates the property-- all the while putting out press releases about how you defaulted. EDIT: I just looked it up, the bank in question is Euroclear and isn't something specifically setup for this. It sounds like Russia always paid in Rubles and they paid that to Euroclear who then distributed the payments in whatever currency the bonds and such were held in, but due to sanctions they're no longer doing that. So Russia is paying the bill, the middle man just isn't distributing it due to the sanctions. My understanding of them always having paid in rubles might be incorrect, but it sounds like managing those nuances is what the purpose of the bank is.

tablespoon 4y ago

> This is equivalent of a person going to bank to pay off their debt and bank refusing to take money so said person must declare bankrupcy. Yeah, I'm no fan of the Russian government or what it's doing, but this is always going to be "Russia defaults* on Foreign Debt" (with an asterisk). There are too many external factors that were deliberately trying to force this outcome through unusual means for it to be an unqualified default.