The Financial War Part II
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Part II of the Wars Waged with Gold treatment of the financial war between Russia and the West is now available. This part deals mostly with Russia’s anticipatory actions to blunt the Western offensive, followed by the steps that the United States and its allies took immediately in the wake of the Russian invasion of Ukraine.
Russia had prepared. In the years prior to the war Russia accumulated some $600 billion in central bank reserves, with some half of the total held in the US, the EU, the United Kingdom, and Japan. Moscow could use these reserves to intervene in currency markets and maintain the value of the ruble, or to buy weapons from foreign producers.
Russia also maintained a very conservative sovereign debt load, making these debts easier to service and making it possible to take on new debt as the circumstances of war required.
Finally, Russia had established an alternative international payment system (System for the Transfer of Financial Messages, or SPFS) which would enable its banks to continue to process payments with certain customers in the event of a cutoff from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system.