Kremlin explains why Russia is 'immune' from US banking crisis

Disconnection from international finance systems has turned out to be “a blessing in disguise” for Moscow, Dmitry Peskov said

The Russian financial sector is practically immune to the effects of the unfolding US banking crisis largely thanks to Western sanctions, Kremlin spokesman Dmitry Peskov told reporters on Tuesday.

When asked about a spillover effect from the collapse of US lenders, which has led to a global stock rout, Peskov said problems in the American banking system cannot affect Russia in any way.

“Our banking system, of course, has, let’s say, certain connections with some segments of the international financial system, but for the most part it is under illegal restrictions,” he said.

Peskov added that sanctions have been “a blessing in disguise” because Russia is “to a certain extent immune to the negative impact of the crisis that is now unfolding across the ocean.”

Russia’s financial sector became the subject of sweeping sanctions imposed by the US, the EU and their allies over the conflict in Ukraine.

Last year, US-led restrictions on Russia cut off the country’s ten key banks from the Belgium-based financial messaging system SWIFT, which facilitates banking transactions around the globe. Nine of these lenders are also subject to blocking sanctions, which ban international financial institutions from cooperating with them. The US imposed punitive measures on Russia’s largest state-owned lender Sberbank, banning it from processing payments through the US financial system.

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Russia has its own financial messaging system, SPFS, which can act as a substitute for SWIFT in the domestic market. While its coverage is still much smaller than that of SWIFT – which boasts 11,000 financial organizations globally – the spread of SPFS has been gaining speed in recent months.

Meanwhile, the US banking sector has been rocked by a series of collapses that began last week and continue to rattle regional and global markets.

California-based, crypto-focused Silvergate was the first to announce its liquidation last Wednesday, followed by the implosion of Silicon Valley Bank on Friday. The SVB failure was the largest US bank collapse since the financial crisis of 2008. Signature Bank was the latest to be shut down over the weekend. Bank failures have sparked concerns over the health of the entire US banking system, with many other lenders seeing their stocks plunge.

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