File - Pedestrians walk past a branch of the Royal Bank of Scotland in London on January 30, 2012. AFP PHOTO / JUSTIN TALLIS
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With the world watching if U.S. and European sanctions over Ukraine usher in a new Cold War, the showdown first risks sparking a return to capital controls in Russia after they were dismantled eight years ago. President Vladimir Putin's government scrapped capital controls in 2006, becoming the only one of the biggest emerging economies to allow unrestricted flows of money across borders. If the Ukrainian conflict worsens, tripwires may be set off in case the ruble weakens 15 percent or the country's international reserves fall about $100 billion, according to Russian economic institutes that advise the government. In 2006, the central bank made the ruble fully convertible by scrapping currency controls and easing restrictions on investors.Russia's reserves, which peaked at $598 billion six years ago, have since declined by $126 billion and are near the lowest level since 2010 .Russia refrained from introducing controls during the 2008-2009 financial crisis and later refrained from the measure to keep out speculative capital.The central bank still doesn't see any reasons for introducing control over cross-border capital flows, according to its statement.A Chinese model with a fixed exchange rate and capital controls would be a "step backward" for Russia, Nabiullina said in June 2013, when she took over the central bank chairmanship from Sergey Ignatiev.
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