Russia Ukraine war can have some destructive impacts on the entire world.
Possible Sanctions against Russia negotiated by the US and its European allies might take effect. It is not known exactly what they would be, but it is believed that Russian banks will be harmed. This could increase the selling of Russian stocks, especially harming its banks, as foreign investors flee.
As countries across the world ask their citizens to leave Ukraine, there are considerations on the table that Russia might be kicked out of the Swift payments system.
Breaking live reports: “French presidency official: possible sanctions targeting Russia’s access to the swift payments system are under consideration, but we must be careful not to hasten Russia’s rupture with Europe.”
Swift: The Swift development came after Emmanuel Macron, the French president, made a call with Russian President Vladimir Putin, and notified him of possible sanctions. Putin is clearly not pleased to hear that a Swift usage sanction is under consideration.
If Russia is cut off, it could exclude them from global trade. In 2018, Russia announced plans to create its own Swift system with blockchain technology, but Putin has been busy for the past two decades with programmers like Pavel Durov, the creator of telegram.
Therefore, it is doubtful that they have the necessary skills to really carry out a self-made Swift payment system to a satisfactory standard that can satisfy the requirements of such an enormous Russian population.
A Russian Swift system would therefore likely be an insufficient outcome if they are banned from Swift, but Russia can probably still trade globally as it is hoarding gold and can always buy bitcoin – although its central bank does not like the cryptocurrency. This trade, however, would obviously be much more limited than with Swift.
Oil and Gas: The price of oil can rise as it briefly did in 2014 when Russia invaded Crimea, but then it could fall if Saudi Arabia floods the market.
Venezuela ended up paying for this invasion of Crimea as it plunged into hyperinflation after the oil price crash in 2014. Who would pay this time for an invasion of Ukraine is unclear.
Gas could also drop as Arabs flood the market, with the US and Qatar recently in talks as this resource-rich small nation shows some intelligence.
Bonds would be barred, you would think, with the question of whether just government bonds or corporate bonds as well.
Russia’s debt to GDP ratio is only 20%, but that’s still a lot of money that could become more expensive with the ruble likely to drop perhaps beyond 100% to the dollar and beyond, exacerbating already high inflation at 8.7%.
Bitcoin: Bitcoin can go up because unlike Putin’s $100 million yachts that recently left Germany for Kaliningrad, you can easily hedge bitcoin.
How much the price could rise is anyone’s guess, as Russia’s GDP is less than $1.5 trillion, while Ukraine’s GDP is as large as Greece’s at around $200 billion.
But some in Russia have more money than others, with some likely betting on cryptocurrencies, which would be a decent asset under such circumstances.
Global trade is unlikely to be affected, although tensions in the Black Sea could potentially spillover.
There are unconfirmed reports that the movement of ships in both directions on the Bosphorus was temporarily suspended earlier today due to the tumble of the Liberian-flagged dry cargo ship Cheng May.
Three Russian warships passed the Bosphorus earlier this week, with three more on the way. In Kiev, documents are being burned at the US embassy as it is being evacuated, according to Bild.
Russian Invasion: Monday, therefore, could be a little volatile for markets, but we won’t have a good idea until Tuesday when German Chancellor Olaf Scholz meets with Putin.
As far as is known, he is the latest to go to Moscow at this time. The Americans say they have information, or perhaps it is disinformation from the Russians, that they will invade Ukraine the next day, Wednesday.
A rally was held in Ukraine to show a united front with the Russians in 2014 holding protests against the war in Ukraine, but they are being told there will not be an invasion, although they are worried about the consequences.
If there is an invasion, the Americans are saying there will be aerial bombings, with Boris Johnson, the British prime minister, previously calling it a blitzkrieg.
The Ukrainian army will fight, says its defense minister, as the world watches and wonders how will happen.
The price of bread could rise worldwide if war breaks out in Ukraine, known as the “breadbasket of Europe” and the US and Australia. And much of the wheat leaves the country via the Crimean peninsula. They account for about 30% of global corn production, with their vast fields.
