Russian Wealth and The Invasion of Ukraine: Evidence from the Bank for International Settlements

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This paper uses public bilateral deposit data released by the Bank for International Settlements to analyze the effect of Russia's invasion of Ukraine in February 2022 on Russian wealth held abroad. I find a sharp spike of over $22 billion, or 66%, in Russian nonbank loans and deposits held abroad from quarter 4 of 2021 to quarter 1 of 2022. This spike in loans and deposits fully subsides by quarter 2 of 2022. I quantify the spike mathematically and note its exemplary nature. I examine the Russian sectors that are driving the trend, finding a steep decline in Russian nonbank deposits held by households and a spike and partial reversion in deposits held by nonbank financial institutions. Deposits from non-financial corporations exhibit a spike and subsequent fall to lower than pre-invasion levels. I walk through potential explanations for these trends, beginning with a marked decline in Russian loans and deposits in Switzerland that co-trends with Russian household deposits. I further document increases in Russian loans and deposits in Belgium that start after Euroclear began to store seized Russian assets. Lastly, I note a spike and full reversion in Russian loans and deposits held in the US and discuss the possibility that the liquidation of US multinationals could cause the deposit behavior seen in the US-Russia series. This paper has implications for the offshore wealth and capital flight literatures and the effectiveness of the sanctions imposed on Russian Oligarchs after Russia's invasion of Ukraine.



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