The monetary consequences of Vladimir Putin

BERKELEY - Russia's invasion of Ukraine is radically redrawing the global economic, political, and security landscape. Politically, it is pushing Russia away from Europe. It has redoubled NATO members' commitment to their alliance and led Germany to abandon its aversion to defence spending. Economically, it augurs an extended period of high energy prices as Europe weans itself from Russian oil and gas, in turn raising the spectre of stagflation.

On the financial front, Russian banks have been barred from doing business in the West and have been cut off from SWIFT, the bank messaging system for international payments. The central bank's securities and deposits have been frozen, rendering it incapable of stemming the ruble's fall. It is similarly unable to act as a lender of last resort to financial institutions, such as Sberbank, with obligations in foreign currencies. These measures are financially and economically devastating, which is precisely their intent.

Having witnessed this demonstration of financial shock and awe, will other countries re-think how and where they hold their foreign assets? Will they seek a safe haven in China, which has not sanctioned Russia, and its currency, the renminbi?