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With Russia and Putin, you never really know: Is this move extraordinarily stupid or extraordinarily brilliant? Russia is an authoritarian state, that on the on

With Russia and Putin, you never really know: Is this move extraordinarily stupid or extraordinarily brilliant? Russia is an authoritarian state, that on the one hand isn't doing terribly bad economically, but on the other hand notoriously corrupt and not getting a foot in the door innovation-wise. Of course, the "security deposit" isn't for security against these companies failing. The deposit will help with the squeeze Russia is feeling, and on the other hand this whole law would allow the Russian one-party government (which doesn't know any kind of division of power, by the way) to extort Visa and MasterCard. I don't know if building a state-controlled credit card processor is worth it to risk being cut off from Visa and MasterCard. You would certainly expect foreign businesses to be extremely careful or suspicious toward such an entity...

josefresco 12y ago
I'm going to vote for stupid. Money supersedes nationality, and multi-national companies (of which Russia and the US depend on) will be weary of this. Those with money could care less about national pride, they just want/need a good return on their investments and business friendly laws/policies. If Russia messes with this formula they'll be on the outside looking in.
mtrimpe 12y ago
It's already clear that Visa/MasterCard will be a key part of US sanctions against Russia so this is partially a pre-emptive strike. I generally doubt it's going to work out though. My partner is Ukrainian and apparently the Crimeans which were recently annexed and now have to switch are utterly shocked by state of e-banking at their new Russian banks; which doesn't bode well for their efforts...
Silhouette 12y ago
I sometimes wish more states would build state-controlled basic financial infrastructure and cut out the established financial services companies from the low end of the market -- whether that is the big card companies or the big banks or the big insurers or the big mortgage lenders. These financial services organisations make staggering amounts of money for providing services that almost everyone depends on to function in society, yet with very little real accountability and rarely serving the little guy well, and with a long track record of fighting against any state-led efforts to improve the situation on either count. I'm not generally a fan of over-centralising government and infrastructure, but in this case I suspect there are now strong arguments for providing basic state-run financial services that look much the arguments for having currency and the lender of last resort run by the state and not for private profit. The use of card payment schemes as a mechanism for sanctions in this case demonstrates external political influence. Maybe in this specific case some would agree with that, given Russia's recent track record. But just imagine the response if Russia could do the same to the US or the major economies of Western Europe. Or consider a more ethically dubious example, like the UK invoking terrorism legislation to freeze assets when Iceland was in financial difficulty not so long ago. More than the political influence, these measures demonstrate the rather arbitrary nature of the services these big companies provide, or don't provide, particularly across borders. For any first world national economy in the 21st century to remain vulnerable to some big commercial interest getting upset and taking the ball home, whatever the underlying reason, seems unwise on the part of the corresponding government.
- SoftwareMaven 12y ago
  Because the Soviet Union's state-run banks served the little guy so well. The reason the "little guy" gets poor service is because the risk profile is extremely high for the return; however, micro-lending is filling in some of that (see http://kiva.org/ http://kiva.org/, for example). The use of the financial sector as a political weapon is concerning (but that is more possible with state run financial institutions). I'm not sure how you prevent that without basically allowing mega-corporations to be above any national laws. What we really need is an international court that can arbitrate these kinds of disputes.

josefresco 12y ago

I'm going to vote for stupid. Money supersedes nationality, and multi-national companies (of which Russia and the US depend on) will be weary of this. Those with money could care less about national pride, they just want/need a good return on their investments and business friendly laws/policies. If Russia messes with this formula they'll be on the outside looking in.

mtrimpe 12y ago

It's already clear that Visa/MasterCard will be a key part of US sanctions against Russia so this is partially a pre-emptive strike. I generally doubt it's going to work out though. My partner is Ukrainian and apparently the Crimeans which were recently annexed and now have to switch are utterly shocked by state of e-banking at their new Russian banks; which doesn't bode well for their efforts...

Silhouette 12y ago

I sometimes wish more states would build state-controlled basic financial infrastructure and cut out the established financial services companies from the low end of the market -- whether that is the big card companies or the big banks or the big insurers or the big mortgage lenders. These financial services organisations make staggering amounts of money for providing services that almost everyone depends on to function in society, yet with very little real accountability and rarely serving the little guy well, and with a long track record of fighting against any state-led efforts to improve the situation on either count. I'm not generally a fan of over-centralising government and infrastructure, but in this case I suspect there are now strong arguments for providing basic state-run financial services that look much the arguments for having currency and the lender of last resort run by the state and not for private profit. The use of card payment schemes as a mechanism for sanctions in this case demonstrates external political influence. Maybe in this specific case some would agree with that, given Russia's recent track record. But just imagine the response if Russia could do the same to the US or the major economies of Western Europe. Or consider a more ethically dubious example, like the UK invoking terrorism legislation to freeze assets when Iceland was in financial difficulty not so long ago. More than the political influence, these measures demonstrate the rather arbitrary nature of the services these big companies provide, or don't provide, particularly across borders. For any first world national economy in the 21st century to remain vulnerable to some big commercial interest getting upset and taking the ball home, whatever the underlying reason, seems unwise on the part of the corresponding government.

SoftwareMaven 12y ago
Because the Soviet Union's state-run banks served the little guy so well. The reason the "little guy" gets poor service is because the risk profile is extremely high for the return; however, micro-lending is filling in some of that (see http://kiva.org/ http://kiva.org/, for example). The use of the financial sector as a political weapon is concerning (but that is more possible with state run financial institutions). I'm not sure how you prevent that without basically allowing mega-corporations to be above any national laws. What we really need is an international court that can arbitrate these kinds of disputes.