My Friend we are talking here about Central Banks and International banking system.
Russian Federation do have huge sum of Ukrainian currency in its hand and when Russian Federation have sold foreign currency reserves it was not just dollars and euro but even other hard currency which includes Ukrainian currency i think. And this is the reason that Germany have gave 500 million Euro loan to Donbas region. Its like a settlement because of the crisis but now again 2 days back , Russian authorities have again over took 191 million from Privat Bank.
What Russian Federation will do with this money ?
Bailiffs freeze 660 mln rubles in PrivatBank's assets in Crimea
It was reported in Interfax
Up to 10,000 ethnic Germans deported from Crimea in the 1940s and their descendants are already to return to the peninsula after Crimea's unification with Russia, Interfax reported head of the Ethnic Society of Germans of Crimea Yury Gempel saying.
I think this has more to do with the time duration which was declared by Russian authorities in Crimea that till January 2015 , Ukrainian currency can be circulated and after that only rubles. So the deadline is coming in 4 more days.
first of all, that is what you think. not what it is
second of all, do you know how currency and exchange rate, inflation, valuation works?
do you know why a USD $100 notes worth 100 dollar in USD? Thats because the reserve bank regonize the value and willing to exchange 100 dollar worth of US currency when you tender the 100 dollar bill, hence this ie called legal tender
And when each bill are marked by distinct serial number a that no everyone can print a 100 dollar note and say this is the legal tender and hence the Reserve bank ONLY regonize thqt particular 100 dollar bill
Now when you deal with a Bank to Bank situation, you dont work in bill form economy and currency, now you work in credit and debit system. Simply put, your bank can technically hold 23 billions USD but that does not mean you have 23 millions 100 USD note in your bank. So this time reserve bank of America will grant you credit of 23 billions on Trust, thats called credit
Now, say if your bank owe the Central bank 23 billions instead, that is a debt of 23 billions to the reserve bank, meaning you should have 23 billions worth of currency in your name in the bank, but you dont. Now you either get 23 billions credits to pays off the debt or the reserve banm write it off for you. When it write off, they are extending you a line of credit and use it to cover the 23 billions you owe
Currency exchange rate to a foreign currency depends on how much your own currency you hold in your reserve bank, technically, your own country hold the most of your own currency, so when you buy off your own currency from a foreign country, that means you restrict the currency circulation intrnationally, which means the global supply is down, your currency is up and strength against the greenbag
However if what you are holding is less than a ratio set forth to international holding, that mean the world have more of your currency than you, then your currency would devalue a either you decrease trading or you print more (regonize credit) on your own currency
Now coming back to the question. Now Russian holding more Ukrainian Currency since the annexation of Crimea, which was part of Ukraine before, but the currency owne4 does not change, it is still in Ukraine as they are "Credit" instead of hard paper money, which is just some number in a book somewhere. Ukraine can write off this credit as Russian actually holding nothing but some number on some paper or on some computer on a Crimea bank, if Ukraine does not pays off the credit, the number the Russian hold is just that. Numbers
It would be a bit different case if Russian is holding 165 billions of ukrainine currency on paper currency (note) that would involve some adjustment of the paper money system and reprint of the currency
Money in bank is just credit, be that in a note form or just number, it does not do anying until the currency issuer vouch for that credit, in this case, the issuer is Ukrainian Reserve or Central Bank. They can strike off the cash hy serial number and call that illegal tender by either changing the serial number system. Effectively write off that note from legal tendering. Or if they are juat credit, then well, the Central bank or the Reserve bank of Ukraine can simply write off the credit.
Will they do so is another problem
What we just do is plain and simple the destruction of the russian economy.
