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Executive Summary
● Russia’s economy is experiencing an unprecedented downturn ushered in by economic sanc-
tions, restrictions and high-tech export controls, which are causing the Rouble to depreciate
and may cause high levels of inflation. In turn these will significantly erode Russia’s wealth
and isolate it from the global economy.
● Russia’s mitigation and retaliatory measures have not had a significantly reassuring effect,
and it is uncertain if they can avoid a financial collapse.
● Major Russian financial institutions’ isolation from worldwide standards like the SWIFT pay-
ments messaging service and the freezing of significant forex reserves belonging to Russia’s
central bank will drive Russia to rely increasingly on China. Attempts to create a rival trading
bloc may be made, but the historical precedent and current indicators don’t project it as fea-
sible yet.
● While Russia and China may be able to convince some of their trade partners to switch some
percentage of their FOREX reserves to alternative currencies and adopt alternative mecha-
nisms for exchange, a lot of uncertainty exists about the long term sustainability of these al-
ternative mechanisms.
