International banking lobby has warned that it is 'extremely likely' Russia will default if the war in Ukraine escalates

• The Institute of International Finance's chief economist said a Russia default is "likely" if the Ukraine crisis does not deescalate.
• About half of Russia's foreign reserves are held in nations that have frozen Russian assets, according to the global banking lobby.

A default of Russian debt is likely if the war in Ukraine escalates and steep sanctions on the Russian economy remain in place, according to the Institute of International Finance.

"If we stay here and this escalates, then default and restructuring is likely," Elina Ribakoba, chief economist of the global banking industry lobby group said Monday in a media call.

The Russian economy could suffer a double-digit contraction this year, as about half of its central bank's foreign reserves are held in nations that have frozen Russian assets, she explained.

If there isn't any deescalation in Ukraine, Ribakoba said a default would be "extremely likely."

Following Russia's invasion of Ukraine last week, the US, UK, Canada, and Europe have imposed a stringent set of economic sanctions, including a ban from the SWIFT interbank messaging system. The ruble has slumped 30% and Russia's central bank hiked interest rates to 20%.

The Russian stock market remains closed, and Russian citizens have been photographed at ATMs attempting to withdraw foreign currency.

BP, Shell, and other major companies have said they'll cut ties with Russia.

Russia, in turn, responded by declaring Western companies could not exit investments in the country.

Sanctions could grow tougher still, though Ribakova said the measures so far are already "the most severe economic sanctions imposed on a country" ever.