Vladimir Putin has signed an executive order banning Russians from leaving the country with more than $10,000 (£7,500) in foreign currency amid growing fears that Russia’s financial system is on the brink of collapse.
State media reported late Tuesday that the export of foreign currency cash and foreign currency instruments over $10,000 would be banned from Wednesday, and the Kremlin press office said the move was an attempt “to ensure the financial stability of Russia”.
Experts have warned that banks will struggle to sell assets to stay afloat after sanctions sent markets into a tailspin this week.
The chaos comes after the Russian central bank was blocked from accessing a large part of its foreign exchange reserves.
Britain and its allies have targeted a number of Russia’s biggest banks with sanctions, including the biggest state lender, Sberbank.
Foreign Secretary Liz Truss is set to introduce a total asset freeze in the sector.
Russians were seen queuing outside bank branches in images shared on Twitter.
Russian banks in Europe were also hit by the panic. Sberbank Europe, a subsidiary of the public bank, warned that it faced “large deposit outflows in a very short time”.
Liam Peach, Russian expert at Capital Economics, said: “It looks like the Russian banking sector is on the brink of crisis in one form or another. The banking sector is facing a huge liquidity problem.
“What usually happens when we have a run on the banks like this, it forces the banks to sell their liquid assets.
“But because these banks don’t have a lot of liquid assets – especially foreign currency assets – they may be forced to sell other assets at depressed prices.
“Given the impact of the Russian markets in recent days, these prices are likely to be quite depressed. This will lead to shrinking bank balance sheets, tighter credit conditions and deteriorating capital conditions for banks. It seems that the banking sector is either going to be hit very hard and any crisis there could ripple through the wider economy.”
Sberbank was forced to restrict withdrawals from some European subsidiaries. The European Central Bank has warned that some of Sberbank’s continental divisions could completely collapse.
Mr Peach added: “It is not clear that there will be restrictions on withdrawals in Russia. But I think it is very likely that these restrictions will come in the days or weeks to come, depending pressure on the system.”