The spread of Russian interbank interest rates over the central bank’s policy rate – which was hiked aggressively on Monday – has widened pointing to some stress in the banking sector. But for now it is far from the levels recorded during 2008/09 and 2014/15. A key risk is that the plunge in Russian asset prices, together with fears of counterparty risk, cause interbank lending to freeze and rates to spike. This has often been a precursor to banking crises and so the interbank rate will be a key indicator to watch.
EM Drop-In (Thur. 3 March, 15:00 GMT): We’re discussing the impact of Russia-Ukraine on emerging markets in a special 20-minute briefing this Thursday. Registration details.
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