New sanctions could be worse, but risks remain

“Hard sanctions” are possible in the event of a full takeover of Ukraine, refusal to hold talks, a coup d'état and Ukraine's accession in Russia like it was the case with Crimea.This would mean disconnecting Russia from the global payment system, the Central Bank's FX-assets freezing ($497/$630 bln), and an embargo on oil, gas and metal exports.Fixed exchange rate (before October 2013) instead of the current free market cannot be ruled out if the Central Bank has no access to FX-reserves for interventions.A transition to “manual control” of the entire financial system is possible.

The process will obviously be accompanied by further market and assets rout.Good news for the market? The most important sanctions - against oil, gas and metals - have not yet been imposed and are not planned!Investors expected a worst-case scenario, hence current Russian asset prices reflect a worst-case scenario that has not materialized.