How big a threat are financial sanctions for Russia?

The possibility that the EU might follow in the steps of the US and restrict access to capital markets for some Russian firms, coupled with Moscow’s decision this week to cancel another government bond auction, has raised concerns as to how Russia would fare with limited market access. Much depends on the scope of any financial sanctions. But while the state’s strong balance sheet should help to limit the direct disruption caused by any restriction to foreign capital markets, the indirect impact on the wider economy could be significant.