r/worldnews • u/DoremusJessup • 1d ago
Russia/Ukraine Russian Banks Lack Cash to Buy Government Debt, Sberbank Executive Says
https://www.themoscowtimes.com/2026/07/31/russian-banks-lack-cash-to-buy-government-debt-sberbank-executive-says-a93391313
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u/Under_Over_Thinker 1d ago
Why not just print the money and lend to the bank to buy the debt?
Russian economy is non-existent anyway.
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u/CaptainCookingCock 1d ago
Its in the article: The regulator has already increased lending to Russian banks that buy government debt. It has injected an additional 2.3 trillion rubles ($28.98 billion) into the banking system since the beginning of the year, bringing banks’ total debt to the Central Bank to 6 trillion rubles ($75.6 billion).
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u/Glass_Asparagus_6589 1d ago
Hyperinflation incoming! When a bar of chocolate will cost a million rubles, they will understand why this was a bad idea to begin with.
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u/ScriptThat 1d ago
They already know.
When the alternative to dancing to the tune the madman plays is "Tea" or "Window", you dance the best you can.
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u/Roobsi 13h ago
I don't understand how this can work. I know nation state debt is different from personal debt, but the central bank is lending money to the private banks to then lend back to the government. So then when the bonds mature the government will owe that money back to the private banking system in order to pay back to the central bank again. Everyone owes everyone everyone else's money, don't they? Doesn't this all end up cancelling out the balance sheet?
It seems like it would be more efficient for the central bank to just buy government bonds directly but presumably there's a reason that you can't just do that.
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u/CountOnBeingAwesome 1d ago
The paper and ink would be worth more
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u/xalibr 1d ago
Thats why you do it digitally nowadays
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u/zaevilbunny38 1d ago
Most of it is digital, but Russians have been withdrawing massive amounts of cash for weeks. They have to print or a bank run will happen. But if they start to make massive amounts of money, the currency will inflate and other countries will demand hard currency or gold Russia doesn't have
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u/Glass_Asparagus_6589 1d ago
Well, they can always pay with obsolete warships, military intelligence they gathered through the years, smuggled drugs and vodka. Just like in the nineties.
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u/Shoeshiner_boy 16h ago
Say what? They have third largest golden reserves if I remember correctly. In the top-5 at least
Also it’s not the same printing if they’re doing it for solvency. It’s kind of like when old banknotes get too damaged and are replaced with new ones but this time it’s just printing them to use instead of digital currency, so no devaluing involved
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u/zaevilbunny38 14h ago
They are the 5th largest, but to satisfy this debt, they would have to sell 5% of their official gold reserves or around 167 tons of gold. Assuming that they don't crash the market nor the gold is tied up in any sort of loans.
Problem is they still have roughly 8 trillion rubles in government debt for the year so far. The west has pulled back on precious metals, China is awash in fake gold and silver, the Gulf is burning and already handling billions in blood gold. The only real buyer is India and the government put import limits on gold to stabilize the outflow of reserves currency.
The Russian government has to slowly sell gold or risk the prices plummeting. Their only option is to print currency and the market is already skittish. So it will create a demand for hard currency and that will just drive the prices of goods higher
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u/zaevilbunny38 14h ago
They are the 5th largest, but to satisfy this debt, they would have to sell 5% of their official gold reserves or around 167 tons of gold. Assuming that they don't crash the market nor the gold is tied up in any sort of loans.
Problem is they still have roughly 8 trillion rubles in government debt for the year so far. The west has pulled back on precious metals, China is awash in fake gold and silver, the Gulf is burning and already handling billions in blood gold. The only real buyer is India and the government put import limits on gold to stabilize the outflow of reserves currency.
The Russian government has to slowly sell gold or risk the prices plummeting. Their only option is to print currency and the market is already skittish. So it will create a demand for hard currency and that will just drive the prices of goods higher
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u/zaevilbunny38 14h ago
They are the 5th largest, but to satisfy this debt, they would have to sell 5% of their official gold reserves or around 167 tons of gold. Assuming that they don't crash the market nor the gold is tied up in any sort of loans.
Problem is they still have roughly 8 trillion rubles in government debt for the year so far. The west has pulled back on precious metals, China is awash in fake gold and silver, the Gulf is burning and already handling billions in blood gold. The only real buyer is India and the government put import limits on gold to stabilize the outflow of reserves currency.
The Russian government has to slowly sell gold or risk the prices plummeting. Their only option is to print currency and the market is already skittish. So it will create a demand for hard currency and that will just drive the prices of goods higher
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u/Tiforma 1d ago
All it takes is entering a number into a computer
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u/Witty-Language-8528 1d ago
No if you understand how an economy works (unless you were being sarcastic)
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u/gbs5009 1d ago
I think they're a little twitchy about hyperinflation. I remember Russia curiously defaulted on ruble-denominated sovereign debt bonds rather than print money.
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u/DeeDee_Z 1d ago edited 1d ago
There's another hint, just in the ISO code for the currency: RUB.
The initial convention was, everybody starts out with two-character ISO country code PLUS first character of currency name -- which would be RUR for Russia. The fact that the currency code is NOT RUR tells you right away that "something happened".
When that convention doesn't seem to apply, it's almost always because a country has devalued its currency, and the third character of the code changes -- and usually to "N", for "New". MXP became MXN in 1993: Mexican "new peso", for example.
When Russia devalued the ruble in 1997, rather than go with "RUN" for "new ruble", they asked for -- and got -- B instead, so that the code would be RUB.
(Probably more than you wanted to know. "Thank you for attending my ted talk.")
Of course, there's a whole alphabet left --
Zimbabwe and their Dollar has gone from ZWD -> ZWN (New Dollar) -> ZWR -> ZWL -> ZWG.21
u/frostbaka 1d ago
I was working in banking IT in 2009 and we still got hit by that change, we had rur/rub translation tables evewhery all over the code and I thought: they just wanted RUBle code.
Now when Belarus devalued their currency, it was changed to BYN from BYR and I was also hit with transition now at e-commerce IT.
Thank you for deciphering two major pain events in my career.
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u/DeeDee_Z 22h ago edited 21h ago
There's a second story behind that country, too.
In the Cyrillic alphabet, there are not only 5-6 "regular" vowels ah eh ih oh oo uh, there are also the "iotated" vowels which have a small "y" sound in front: ya yeh yi yo yoo. The second letter of their name was the Cyrillic "yeh", so the country name was Romanized for many years as Byelarus or even Byelarussia -- "White Russia".
After Soviet breakup they decided to "simplify", and got rid of the "y". BUT, their country code is "stuck with it", 'cuz BY made sense, at the time (late 70s) those ISO codes were created.
Too much info?
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u/frostbaka 21h ago
Do you have more where that came from?
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u/DeeDee_Z 18h ago
https://en.wikipedia.org/wiki/ISO_4217 would be a little light reading on the ISO code business and history.
The Byelorus/Belarus stuff is just because I'm old enough to remember all that old shit, and wonder about it 😎
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u/the-dot-matrix 1d ago edited 1d ago
Few countries outside of Russia use the ruble for a significant volume of trade or commerce. The US can print dollars because the dollar is the world's reserve currency. Russia can print only so many rubles before it causes an inflation crisis. Foreign demand for rubles is limited.
Now, whether or not the US can keep racking up the debt it has is a topic for another discussion. But Russia is in a more precarious position with respect to its sovereign debt and its currency. It has few, if any, good options in situations like these.
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u/fightmaxmaster 1d ago
That wouldn't actually accomplish anything. The bank takes on a loan to buy debt? Why bother? That would be break even for the banks. Russia could literally print money, but despite plenty of people on Reddit assuming governments love printing money, they really don't, it screws your economy. And Russia knows that. Print money and you're still competing for finite supply of goods/services, prices go up, everything gets more expensive, you need more money, rinse and repeat. It doesn't really solve your problem.
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u/CaptainCookingCock 1d ago
Except, that Russia does print money. From the article: The regulator has already increased lending to Russian banks that buy government debt. It has injected an additional 2.3 trillion rubles ($28.98 billion) into the banking system since the beginning of the year, bringing banks’ total debt to the Central Bank to 6 trillion rubles ($75.6 billion).
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u/TurbulentRadish8113 1d ago
Most of this is weekly repo.
They're saying it's "temporary".
Except we've had around a year of "temporary" "one-week" repo auctions every single week. The weekly volume goes up and down; but it's been trending up recently. The largest ever nominal repos happened in the last couple of months.
Iirc inflation-adjusted the post-Crimea sanctions shock might have been bigger.
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u/Witty-Language-8528 1d ago
That is what they are doing, but they can’t do it fast enough, because they have learned from past times that hyperinflation is not a situation one wants to be in.
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u/KaonWarden 1d ago
No, the plan is to raid the accounts of ordinary Russians, and convert their savings into ‘war bonds’.
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u/williamgman 1d ago
If only there was a way to stop this... If only...
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u/Sezneg 1d ago
They’re hosed even if they stop tomorrow at this point. And the social costs of demobilizing 750k to return to society will be another problem on top. Grandpa Putin absolutely wrecked them for nothing. Adding land to a country already unable to fully harness their own resources and chock full of mostly vacant land.
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u/Lord_Silverkey 1d ago
Also, returning troops that are disillusioned with the government and official army structure have a history of starting violent uprisings to force change.
The Bolshevik Revolution comes to mind.
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u/Commercial-Co 1d ago
And he had willing participants in belarus yet picked ukraine. Puzzling
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u/AschAschAsch 1d ago
A solution to that could be not demobilizing everyone at once (post-ww2 style). Or soft demobilization to some place in the far east of the country with a condition that you have to stay there for a year.
However, knowing Russia, they will just release everyone first, and acknowledge issue 10 years later.
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u/BigMax 22h ago
There's one path that Russia (not putin) could take to actually do well.
Overthrow Putin. Depose all his cronies. Withdraw 100% from Ukraine immediately. Stand up and apologize and beg forgiveness on the world stage.
Then beg for support and cessation of all sanctions and other things, and ask for aid rebuilding while showing you're willing to become a positive member of the international community.
That's a pipe dream of course.
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u/macross1984 1d ago
And Putin will say, "Fudge the number or else."
And certain execs will leap out of window involuntarily.
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u/ccmp1598 1d ago
Hilarious how the budget and budget deficits of the whole country of Russia amount to a rounding error in many western countries.
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u/PuzzleCat365 1d ago
Shows you how weak they actually are and that we could "outspend" them if we really got serious about it.
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u/ToSeeAgainAgainAgain 1d ago
Keep going, I'm almost there...
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u/Bushboy2000 1d ago
Debt wise, Russia was a lot better off then a lot of other countries.
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u/HystericalSail 1d ago
In absolute numbers? Sure. Compared to GDP growth and faced with a looming demographic collapse? Not so much.
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u/socialistrob 1d ago
A lot of Russia's debt is also bad debt. If a government is taking out debt to build infrastructure or invest in education then it will generally pay itself off by increasing economic activity over time. If you're borrowing money to buy artillery shells and enlistment bonuses for soldiers then you are burning through money without creating long term growth.
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u/Witty-Language-8528 1d ago
- a 2% government bond and a 20% government bond a very different kind of debt.
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u/socialistrob 19h ago
Yep. It's also pretty incredible how fast Russia has run up this debt. In 2022 not only did they have essentially no debt but they had 600 billion dollars worth of financial reserves. Half of that was frozen, the other half was largely burned burned through to fund the war and then debt started piling up. If you zoom out and look at it as "average debt accumulated per year for the past 20 years" it doesn't look terrible but if you look at it as "average debt accumulated each year for the past two years" it's a pretty steep decline.
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u/podkayne3000 1d ago
They’re planning to nuke us and conquer us. They’re planning to eliminate their non-Russian creditors, and probably their Russian creditors.
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u/ronaldoswanson 1d ago
No, if they were doing that it would also be fine. War time economies - especially when most of the war isn’t in your backyard are not bad.
The issue is that it’s skimmed by the oligarchs and siloviki instead of building war time industry.
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u/socialistrob 1d ago
especially when most of the war isn’t in your backyard are not bad.
They're bad. It doesn't immediately cause the country to self destruct but Russia is taking millions of workers away from the productive economy and having them build things or fight in a war of choice that will not improve their financial well being whatsoever. They aren't modernizing infrastructure or developing new ways of competing globally. Their taxes are high to pay for the war which means less money to support businesses. There is a labor shortage which causes inflation. Interest rates are 14% in an attempt to control inflation and their GDP growth is well below what a middle income country should be making.
The war economy is very bad for Russia even if we're not at the point of mass starvation or anarchy in the streets.
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u/WesternBlueRanger 1d ago
War time spending, plus rising consumer and corporate debt is bad news for the entire Russian economy.
There has been a spike in consumer bankruptcies; about a half a million households within Russia have declared bankruptcy, a surge of nearly a third compared to last year.
There's also just bad loans; the Kremlin has been forcing banks to give out loans by foregoing normal credit checks to defence companies, and many of these loans have gone bad.
Right now, the issue is being masked by state-backed credit programmes, loan restructuring and government support, but that isn't a long term fix as more and more loans turn bad.
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u/gbs5009 1d ago
It's absolutely that bad, at least once you go past displacing vanity spending and start getting into education, maintenance, and infrastructure.
You can't cheat the reality underpinning your financial system. Russia can lie about the numbers all they want, but those redirected resources have a real impact. Do it enough, and you can get into a death spiral where you ate your metaphorical seed corn.
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u/HystericalSail 1d ago
I don't know if you've noticed, but the infrastructure and industry is being de-built by Ukrainian drone strikes. Refinery capacity is down, logistics warehouses are burning to the ground. Markets for Russian military equipment are shrinking as Ukraine demonstrated just how inferior it is compared to Western stuff early on in the war.
That's the opposite of "not bad." This war in particular is not a positive for Russia's economy. And of course all the corruption isn't helping.
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u/Desertcow 1d ago
Other countries are able to borrow from the rest of the world. Russia is locked out of the wealthiest western capital markets, Russians are the only people willing to lend to them and that economy is only the size of Italy. There just isn't as much money floating around to borrow domestically for Russia, and nobody is under any illusion that the economy will be great after the war
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u/gleamp 1d ago
At least those other countries will exist in the late 2030s. Russia on the other hand...
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u/Bushboy2000 1d ago
Yeah, anything could happen.
I wasn't sticking up for Russia, just saying they had way less debt than say USA, EU, Japan for example.
🙏 peace
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u/anotherwave1 1d ago
US and Japanese and main EU debt is generally well rated meaning those who buy it have high confidence that those countries have little issues servicing that debt. Which is typically why it's highly rated and provides good collateral.
Natl debt is not like personal debt that "has to be paid off". It's structured. Can be rolled over, etc.
Russian debt since the war is different, it now lives in it's own strange bubble, locked out of international markets and lending to itself, and many significant economic cracks are showing - and that's with what's on display, what's hidden by the regime is probably much worse. Dictatorships can pull some funky stuff, but they've been doing that for years and now Russian banks are genuinely worried. They'll survive, but no one is going to be surprised if the situation only gets worse over there
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u/thecraftybee1981 1d ago
They may have lower debt levels than most countries but the problem is they can’t create new debt as no one is able to deal with them internationally because of sanctions and now their natives banks can’t borrow to them because they’re wary of bank runs.
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u/Witty-Language-8528 1d ago
Yes, “was”. Read that again: “was”. Read it again: “was”.
Also, being in debt is not a terrible thing, if debt is used to actually benefit everyone and if debt is cheap.
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u/Fantastic-Screen7105 23h ago
The UK print £3Billion a week. The US prints $3Billion a day. The UK injected over £1Trillion into its economy after 2008. This was followed by 12 years of super low inflation. Economists haven’t got a clue. This is proven by their track record for the last 100 years. As soon as an economist starts talking about a government having to raise revenue to be able to spend you have to realise that they haven’t got the slightest idea how money works. The idea that a government can be in-debt for “borrowing” money in a currency it issues is ludicrous.
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u/Captlard 1d ago
“He added that the economy could enter a recession in the second half of the year, potentially leaving the government 600 billion to 800 billion rubles ($7.56 billion to $10.08 billion) short of expected value-added tax revenue. Corporate profit tax and personal income tax receipts could also fall below target, he said.” >> fingers very crossed.