MOSCOW -- A new specter is haunting Russia, spooking financial markets and making political leaders tremble: devaluation of the ruble.
President Boris Yeltsin's government is fighting to defend the currency, spending down precious bank reserves. The West, fearful that a Russian financial collapse could rattle markets still shaky a year after the Asian crisis, has tried to shore up Russia's reserves with a $22.6 billion bailout.
A devaluation would certainly hurt anyone holding ruble-denominated assets. Most foreign investors have sold off such securities in recent weeks, but some German banks are said to still be heavily invested.
Few ordinary Russians hold stocks or bonds, and most of the world of high finance takes place on a level far removed from day-to-day reality. So far, few Russians have seen any fallout from the summer's financial crisis.
That could change if the ruble falls, and it could have serious political consequences.
The most immediate possible effect on ordinary people is that consumer prices would rise sharply, especially on imports. More than half of the food in Russian stores is imported.
That could raise the possibility of social unrest. While there have been scattered strikes across Russia this summer, so far they have been uncoordinated and largely ineffective.
"Right now, the population is totally calm," says Igor Bunin of the Moscow branch of the Heritage Foundation, a think tank. "But devaluation could set them off."
Other analysts don't see a danger of widespread protests. Alan Rousso of the Carnegie Endowment says uprisings in Russia have historically been small and localized.
"There are always going to be pockets of social unrest," he says. "But there's not going to be a wildfire that they can't put out."
Another consequence of devaluation would likely be the collapse of as many as half of Russia's 1,500 banks.
The first signs of a banking crisis appeared last week, with the Central Bank suspending some interbank dollar sales and rumors spreading of some bank defaults. The Central Bank denied the rumors, but depositors at some banks were told they could withdraw funds only in rubles, not dollars. Prices at some exchange booths rose above the official rate.
But Russians have been getting by on very little for a long time. Most of them grow at least some of their own food and have learned to survive economic and political upheaval.
Many Russians, burned by hyperinflation after the Soviet collapse, now hold their money in dollars -- in accounts or under the mattress. Those with ruble deposits have placed them overwhelmingly with the state-backed Sberbank, where the deposits are guaranteed.
Moreover, analysts say most of the banks that would collapse probably don't deserve to be in business. Many are not traditional banks and don't hold deposits for customers. Instead, they are essentially money exchange companies that speculate on the financial markets and hold most of their assets in over-valued rubles.
In some ways, devaluation could even be beneficial. Banks and the government would get a break on ruble-denominated debt, paying it off with cheaper rubles. Russian goods would become more competitive in relation to imports, giving hard-pressed Russian companies a boost and perhaps spurring investment in new ones.
In the absence of a serious run on the ruble, the government can probably hold out for a few months. But if current trends continue, analysts say they can't hold up the ruble indefinitely.