“Western countries are doing everything possible to get Russia to declare defaultRussian Finance Minister Anton Siluanov told Russia's state news agency Tass this week.

Earlier, nearly half of Russia's foreign exchange reserves were restricted after western countries removed Russia from SWIFT and froze the foreign exchange accounts of the Russian government and central bank, leaving Russia "artificially" at risk of defaulting on its debt.

Russia temporarily avoided defaulting on its debt by repaying coupons twice through frozen overseas accounts, but the United States blocked the channel again this week. On Monday, the U.S. Treasury Department refused to grant JPMorgan Chase & Co sanctions immunity for handling money transfers, thus preventing Russia from repaying a $649.2 million euro bond due on Monday.

The US Treasury said US banks would no longer be allowed to facilitate such payments and hinted that Russia could seek other means, perhaps through non-US bank channels.

As it was close to the deadline for defaulting on foreign debt, the Russian Ministry of Finance responded on the same day that it would repay rubles to bondholders and transfer the money to accounts in Russia. Russian Finance Minister Siluanov said that once the right to use the foreign exchange account is restored, holders of maturing euro bonds will be allowed to convert the rubles they have received into foreign currency.

Since all Russian bonds to be repaid are required to be paid in dollars, this is not in line with the terms of the bonds, but shows Russia's determination not to let bondholders go home empty-handed.

The last time Russia defaulted on its debt was in 1998, but it was mainly a domestic default, while the last external debt crisis occurred after the 1917 revolution. As a result, Moscow remains adamant that it wants to avoid an unpleasant situation in which debts cannot be repaid.

So, there are two key questions:

First, can Russia avoid default for the first time in a century?

Global rating agencies say Russia has a 30-day grace period to pay dollars, but if bondholders do not receive remittances within that period, Russia will default.

The cost of credit default swaps (CDS) to insure Russian sovereign debt has risen sharply, according to the latest data from ICE data services, and current CDS prices show that the market expects a Russian default to be close to 90 per cent this year.

China Finance Online Co Ltd is waiting for the authorities to determine whether a default has occurred.

But it is not clear how the decision will be announced.After a series of downgrades, rating companies are abandoning Russia's rating because of the EU's ban on providing ratings to Russia. Moody's Corporation and Fitch Ratings have withdrawn their ratings on Russia, and S&P Global Inc. Global said in a statement on Saturday that it would abide by the EU ban on April 15, and all its ratings on Russia were subsequently revoked.

There is also a credit derivatives decision committee made up of buyers and sellers, which will vote on whether credit events occur and whether default swaps have been triggered.

In additionAt the end of 2018, Russia amended a federal securities law so that local bond issuers no longer need to ensure that payments reach investors. As long as these funds are remitted to the relevant clearing system, the borrower has fulfilled its obligations, which is the financial infrastructure to help deal with capital flows.The Russian rule is similar to the way bonds are paid under British law.

Said Tamer Amara, a partner of Dentons, a law firm specializing in Russian capital markets.In accordance with the above legal provisions, as long as you have paid to the relevant clearing system, you have fulfilled your obligations. Lawyers from other law firms with operations in Moscow and bondholders in the United States have reached similar conclusions.

Records show that the Russian Ministry of Finance has remitted interest on rouble bonds maturing on March 2 to the Russian State Clearing and Deposit Administration (National Settlement Depository, or NSD) on time. However, foreign investors have not yet received the 22 billion rubles ($270 million) because the Russian central bank has banned the transfer.

The Russian Ministry of Finance has previously said that it has transferred the full amount of ruble money to the state clearing depository, and stressed that it has "fully fulfilled its obligations."

Some foreign investors may not be aware of the new rules, but the original federal securities law is still published on the central bank's English-language website.

Second, what is the impact of default on the Russian economy this time?

Unlike previous defaults, Russia, which has enough money to repay its debt this time, is sitting on $600 billion in foreign exchange reserves.

Even if Western countries compete to reduce their dependence on Russian commoditiesRussia still earns billions of dollars a week from oil and gas exports.

Although the external conditions of the Russian economy are still challenging, which greatly limits economic activity and the risk of financial stability still exists, the risk will not increase for the time being in view of measures such as capital controls.

Against this backdrop, Russia's central bank unexpectedly cut interest rates by 300 basis points this week, and after the news, the ruble climbed to its highest level since November 2021, fully recovering the ground lost since the crisis between Russia and Ukraine.

Finally, analysts sayAs sanctions have cut the country off from international markets, the immediate impact of a formal default on the Russian economy will be limited.