Welcome to this E-Cyp Online Conversation. My name is Frederick Erickson and I'm very pleased to be joined today by Professor Michael Bernstein, a distinguished scholar at the Hoover Institution at Stanford University,

where he researches long-term economic trends and how they play out in different economic systems.

A lot of his work has focused on Russia, and he has published several books on, among other subjects,

Russia's banks and corporate debt.

In early February, Michael published an article in The Hill that outlined an economic

deterrence measure by Western governments that would be credible to sanction Russia's

central bank and make it impossible for Russia to access the part of its foreign reserve

that is stored with other central banks.

I found it a very interesting article

because such a measure undermines the widely publicized idea that Russia sits on a 630-plus

billion US dollar foreign exchange reserves that can be tapped to take care of the economic

and financial fallout from Western Sanctions.

Officials in Brussels and finance ministries that I shared the article with responded mostly with disbelief,

calling it a wild and even crazy idea.

However, this past weekend, this is exactly what Western governments did.

They followed the logical Michael's idea and has now blocked Russia from using a big part of its foreign exchange reserve.

And it's the design and consequences of this action that I want to talk to Michael about.

Michael, thank you so much for joining this conversation.

It's my pleasure and thank you very much for inviting me.

So we're going to come to the design of the central bank sanction in a minute, but I wanted

us to start the conversation in Russia's financial markets since the weekend.

It's a bit difficult to get exact details about the day-to-day developments, but we have seen the ruble falling heavily,

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