That reassurance, along with tough talk about new austerity plans from Prime Minister Sergei Kiriyenko and Central Bank Chairman Sergei Dubinin, calmed investors somewhat. The boost in interest rates also helped. But the government's margin for error is slim to none, and the country's fate now seems largely in the hands of currency traders. If the ruble peg gives way, then the entire economic reform process is severely compromised. First of all people lose confidence in the currency.
People lose their savings.
The bank system is plunged into crisis. Foreign investors pull out what remains of their cash from Russia and will not be bringing it back in anytime soon. The equity market tanks. And we get both a political and economic crisis. We get an Indonesian scenario.