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To: Enigma who wrote (15926)	8/15/1998 12:10:00 PM
From: Alex	Respond to of 116814

That is my understanding as well E. Maybe ole 49r can help us out here.............. Banks close to collapse as rouble crisis mounts By James Meek and Tom Whitehouse in Moscow Saturday August 15, 1998 Damage from Russia's financial implosion spread from obscure computer dealing rooms to ordinary citizens yesterday as some banks and money exchange bureaux, caught in a countrywide cash squeeze, stopped handing out hard currency. With belief growing that a rouble crash and a series of bank failures are inevitable, and Western fears of a debt default, President Boris Yeltsin hinted that he was about to cut short his holiday to return to Moscow. But Mr Yeltsin insisted yesterday: "There will be no devaluation. That's firm and definite," clinging to the orthodox Kremlin view that letting the rouble slide would destroy the stable currency and low inflation that are his only economic achievements. Opponents of devaluation fear it would spiral out of control, leading to hyperinflation, a collapse of public confidence in reform and a chaotic forced end to Mr Yeltsin's reign - the "Indonesia with nukes" scenario. "At the moment, there is a new wave of the world financial crisis and we have to brace ourselves again to be able to deal with this situation," Mr Yeltsin said on a trip to the north-western city of Novgorod. "We've calculated our reserves and are ready to resist this wave." After sharp falls on Tuesday and Thursday Russia's tiny stock market bounced back yesterday - at one point trading was stopped because it had risen so fast, by 14.5 per cent. But attention has already switched from that miniature trade in dubious shares to the more far-reaching crisis in the banking system. After an acrimonious meeting on Thursday night between government finance officials and the representatives of more than 50 commercial banks, the central bank spent hundreds of millions of dollars from its dwindling reserves yesterday morning to support the rouble. Later it emerged that the bank had been forced to bail out one of the country's best-known private credit institutions, SBS-Agro. One report said another big commercial bank, Inkombank, had also been rescued from the brink. Despite the central bank's efforts to hold the line, using its IMF-replenished stock of hard currency, the interbank market - where banks lend to each other - remained frozen yesterday for the second day. "The banking system is now in tatters," said one Western economist based in Moscow. "There's no liquidity in the market whatsoever." About half of the capital's street currency exchange booths closed early yesterday. Others refused to change roubles for dollars, or charged up to 30 per cent above the official rate. Russians have grown accustomed to switching casually from dollars to roubles as the need arises, and any restriction on that freedom is liable to provoke alarm. One Briton with a business in Moscow said he expected a rouble devaluation and was struggling to convert his rouble petty cash into hard currency. "Most banks are simply refusing to sell dollars," he said. "Those that are selling want seven roubles per dollar which is well above the market rate." A teller at Sberbank, the successor to the old Soviet national savings bank and still by far the biggest holder of private deposits in Russia, said: "My boss says we can't sell dollars today. I can't say why, that's just the way it is." Among the frustrated customers, one pensioner gloated. He had changed his rouble savings into hard currency the previous day - all $25 worth. "Yeltsin says the devaluation won't happen," he said. "But I don't trust him and I don't trust his government. It's too late to save the rouble." reports.guardian.co.uk