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Ukraine war: Russia is threatened with bankruptcy - how fast can it go and what would be the consequences?

2022-06-08T14:29:33.737Z


Ukraine war: Russia is threatened with bankruptcy - how fast can it go and what would be the consequences? Created: 06/08/2022Updated: 06/08/2022 16:21 By: Christoph Gschossmann Ruble banknotes: how long before Russia defaults? © Karl-Josef Hildenbrand/dpa Ukraine War: The sanctions isolate Russia. There is a risk of national bankruptcy. When could it be and what would be the consequences for


Ukraine war: Russia is threatened with bankruptcy - how fast can it go and what would be the consequences?

Created: 06/08/2022Updated: 06/08/2022 16:21

By: Christoph Gschossmann

Ruble banknotes: how long before Russia defaults?

© Karl-Josef Hildenbrand/dpa

Ukraine War: The sanctions isolate Russia.

There is a risk of national bankruptcy.

When could it be and what would be the consequences for Europe?

Moscow - Western sanctions are designed to weaken and isolate Russia and Vladimir Putin following his invasion and the escalation of the Ukraine conflict.

This is obviously having an effect: Moscow cannot pay the first foreign bonds.

Bankruptcy is imminent - but when could it be, and what are the implications?

The first signs are there: Russia has not paid default interest on a dollar bond since the start of the Ukraine war.

The state is on the brink of default.

This has not happened to Russia for more than a century - with the Russian Revolution in 1918. Even if the country has often got into financial difficulties since then, it has not come to bankruptcy since then.

But this time it could happen, as ntv reports.

The Kremlin is in dire financial straits.

It is unusual why Russia does not pay its debts.

The country actually has large foreign exchange reserves and earns billions from gas and oil exports.

40 billion US dollars in foreign bonds are still outstanding, two billion are due by the end of the year.

money would be there.

But the country is largely cut off from international payment transactions due to the sanctions.

A part of the currency reserves is also frozen.

The US on May 24 scrapped a sanctions waiver that allowed Russia to pay off its foreign debt in dollars.

Ukraine war: Russia is looking for alternatives to pay the debt

Russia is looking for alternatives to pay off the debt.

One option would be to pay in rubles to bypass western infrastructure.

Finance Minister Anton Siluanov suggested copying the ruble conversion payment system imposed on European gas customers.

In this model, creditors open accounts in a Russian bank and pay in currencies other than US dollars.

The problem: US investors could not participate.

So how quickly could default occur?

Officially, it could be as early as the end of June.

According to its own information, Russia ordered interest payments on May 27 - this is about 71.25 million US dollars and 26.5 million euros.

The grace period is 30 days.

On Mail 2, Russia had managed to do this just before the end of the grace period at the time, even if it was missing $1.9 million.

The investor committee CDDC then classified Russia as a defaulting payer.

Ukraine war: State bankruptcy of Russia - creditors could go to court

If bankruptcy really does occur, creditors could go to court.

The consequence could be the confiscation of foreign assets of Russia.

Defaulted debt would have to be restructured.

Russia's borrowing costs would rise in the long term, and bankruptcy would harm the state for years to come.

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Russia's ex-president Dmitry Medvedev, who has repeatedly interfered in the war, had warned Europe at the end of April that if his country defaulted, it would find itself in major economic difficulties.

"Russia's insolvency could become Europe's insolvency," wrote the deputy head of the Russian Security Council on the Telegram news channel.

At the same time, he accused EU Commission President Ursula von der Leyen of wanting to bankrupt his country.

That is the "secret intention of the masochists from Brussels".

(cg with dpa)

In the Ukraine war, Chancellor Scholz seeks talks with Selenskyj again.

Weapons are not arriving for the time being.

All information in the news ticker.

Source: merkur

All news articles on 2022-06-08

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