Russia to seize retail deposits if sanctions go too far, official warns

In the event of harsh Western sanctions as Russian forces invade Ukraine, retail customers could risk losing their savings.

Russians’ savings could be confiscated in response to sanctions against the country, according to Nikolai Arefiev, a member of the country’s Communist Party and vice-chairman of the Duma’s committee on economic policy.

The Russian government can potentially seize about 60 trillion rubles ($750 billion) worth of people’s deposits should Western nations decide to block all of Russia’s foreign funds, Arefiev said in an interview with the local news agency News.ru on Monday.

“If all the foreign funds are blocked, the government will have no other choice but to seize all the deposits of the population, or 60 trillion rubles in order to solve the situation,” the official stated, noting that Russia stores over $640 billion of gold and foreign exchange reserves abroad.

He also mentioned that potential sanctions against Russia include a possible disconnection from SWIFT and foreign exchange prohibitions.

Russian President Vladimir Putin officially announced a special military operation in Ukraine, potentially pulling the trigger on a set of sanctions on Russia’s largest banks, including state-backed Sberbank and VTB.

According to local reports, Sberbank mistakenly made a statement on being included in the list of sanctions by the United States on Thursday night but subsequently removed the notice, claiming that the statement was false and was caused by a “website crash.”

At the time of writing, Sberbank’s website reads that Sberbank and all its systems are operating as normal, while clients and legal entities have access to their funds and services in full.

“We are ready for any development of the situation and have worked out scenarios to guarantee the protection of the funds, assets and interests of our clients, as well as to ensure the regular operation of all our functions,” the notice says.

On Thursday, Russia’s Ministry of Foreign Affairs declared that it would make sure to respond to potential Western sanctions, stating, “Make no mistake, we will respond strongly to these sanctions, not necessarily in a symmetrical manner, but the response will be well calibrated and will not fail to affect the United States.”

Balaji Srinivasan, a crypto investor and former chief technology officer of Coinbase, suggested that the ministry was threatening a cyberwar with the West:

The latest news comes as the Russian ruble plummets to an all-time low against the U.S. dollar, with indexes surging up to 115 rubles or more per U.S. dollar for those who want to buy dollars on the open market, up 35% from 74 rubles just a couple of weeks ago. According to local reports, Sberbank was offering its clients to buy dollars at 100 rubles on Thursday.

USD/RUB 30-days chart. Source: TradingView

The latest events have triggered a massive impact on the Russian stock market and cryptocurrency markets, with Bitcoin (BTC) briefly dropping below $35,000 for the first time since June 2021, according to data from CoinGecko. The total market capitalization tumbled below $1.7 trillion for the first time since August last year.

According to Sam Bankman-Fried, CEO of FTX cryptocurrency exchange, the massive sell-off on crypto and stock markets is “to pay for war.”