Bank of Russia Governor Elvira Nabiullina acknowledged for the first time that sanctions imposed on the central bank meant she couldn’t intervene to keep the ruble from collapsing on Monday. 

But what she didn’t say is how much money she still has— in case the central bank is called into action.

Wielding the world’s fifth-largest stockpile of foreign exchange only days ago, the central bank lost at least half of its stash with the stroke of a pen last weekend, according to the European Union’s top diplomat. 

In the view of the Institute of International Finance, about 40% to 50% of Russia’s reserves—last officially estimated at $643.2 billion in mid-February—are potentially out of reach.

Nowhere was the difference more stark than in the currency market on Monday, when the ruble plummeted more than 30% against the dollar as the central bank stood pat. Nabiullina said its interventions reached over $1 billion during the previous two trading sessions. 

At stake is the central bank’s ability to deliver on its main mandate “to protect the ruble and ensure its stability.” With much of its assets now stranded in France, Germany and the U.S., the Bank of Russia resorted to a steep interest-rate hike and capital controls to calm the market.

For Russia’s adversaries, the chase is on for what’s left of President Vladimir Putin’s financial cushion. The Biden administration on Monday banned U.S. people and companies from doing business with the Bank of Russia, a decision that will “effectively immobilize” any Russian central bank assets held in the U.S. or by U.S. nationals, according to a Treasury department statement.

A chunk of Russia’s wealth is likely to fall outside the net, something EU foreign policy chief Josep Borrell acknowledged over the weekend. More than a fifth of the total was stored as monetary gold in Russia as of June 30, 2021, and another 13.8% was in China, according to the latest available data. 

Still, about half of the financial reserves of the Russian central bank are held in Group of Seven countries and will be frozen under new sanctions, Borrell told reporters. “These will be affecting—a lot—the financial system of Russia,” he said.

Another source of cash is also likely to draw scrutiny in the days ahead. 

Russia had $24.1 billion as of the end of January in the International Monetary Fund’s special drawing rights, allocated to member countries based on their share in the organization, according to the latest official data. 

Access to those funds could potentially be constrained as governments around the world throw their support behind Ukraine after Russia’s invasion.

What Our Economists Say:

“Russia is in a financial crisis—the question is how deep and prolonged it will be. Western sanctions against the country’s central bank proved to be a tipping point, blocking access to reserves that would have been a crucial backstop to the banking sector. Russia faces certain recession.”

Russia has worked to remove the dollar’s hold over its financial system in recent years—selling most of its U.S. Treasuries in 2018—as it girded for potential sanctions.

Yet Credit Suisse Group AG strategist Zoltan Pozsar reckons the Bank of Russia has $150 billion more held in U.S. dollars than its official numbers suggest. Pozsar parsed data from the central bank and financial markets to calculate the larger share and estimates the Bank of Russia’s dollar exposure is about 50%, compared with the 20% it reports.

Any unreported reserves would be far harder to track and target with sanctions, though it does raise the potential for the U.S. and others to target more accounts—if they can identify where that money is.

The money trail fades even more when it comes to the central bank’s physical holdings of hard currency. The latest official data showed $152 billion in cash and deposits. It’s also been buying foreign currency for the National Wellbeing Fund, which forms part of Russia’s reserves. The purchases in the open market were only suspended in late January after the ruble came under pressure.

Of the central bank’s total holdings, dollar and euro-denominated cash held in its vaults totaled just $12 billion, according to Michael S. Bernstam, a research fellow at the Hoover Institution at Stanford University.

“Central bank sanctions will ensue three ruinous runs: on foreign currency, on banks and on the supply chains,” Bernstam said in a column in The Hill written before the latest round of penalties. “With only $12 billion available to prop up the ruble, the exchange rate will devalue and collapse. People will run on whatever foreign currency they could obtain at whatever price, as the store of value.”