Investors and policymakers worldwide are braced for a shake-up of global markets, due to heightening tensions and sanctions in Ukraine and Russia.
Market watchers have warned that a further clampdown on Russia by the West could threaten Europe's fragile recovery and risk a "credit crisis" in Russia and beyond.
Starfort Holdings Chairman Ken Courtis said the sanctions against Russia meant international banks should be very careful about extending credit to Russian counterparties.
"Now we are starting to see international and Japanese banks cutting back (credit) lines, and as this progresses and the sanctions become more intense, this could provoke a massive 'credit crisis' in Russia and beyond Russia," he said.
Courtis said banks were already reconsidering whether to renew credit that was outstanding to Russian parties, or to take part in scheduled initial public offerings (IPOs).
He compared events to the 1997 Asian financial crisis, which gripped much of East Asia and raised fears of worldwide market contagion.
"You remember when the crisis started in Asia in 1997, people said Thailand, where is Thailand? Russia is not Thailand, it is much bigger and much more significant player in the world economy, so we have to be very careful how this progresses," Courtis said.
"It will obviously shake up markets, as it did on Friday, and it will continue to do I think in sessions ahead," he added.
Violence in Ukraine escalated over the weekend as clashes broke out in six cities in eastern Ukraine, and pro-Russian forces stormed a police station in Odessa, freeing close to 70 activists that were being held.
On Monday, the Ukrainian government reported that four paramilitary policy had been killed near the rebel stronghold of Slaviansk. Plus, the interior ministry drafted a new special forces unit into the southern port city of Odessa.
Meanwhile, Ukraine owes Russia more than $3.5 billion and the Kremlin has threatened to cut off Ukraine's gas supply by June.
The news from Ukraine rocked markets on Monday, and most bourses across Europe slipped over 1 percent.
Gold rose to a three-week high, as uncertainty bolstered the metal's safe haven status. Spot gold was up 0.5 percent on Monday at $1,306 an ounce, after hitting $1,308 earlier in the day.
Lothar Mentel, chief investment officer at Tatton Investment Management, said Ukraine was at risk of civil war.
"Russia doesn't need to invade Eastern Ukraine, their Russian separatists are already there so this is all turning into a messy civil war," he said.
"Russia, I think it is important, because some of the Putin aggression is actually a result of a weak economy and he is trying to put up a smokescreen around that which needs to be watched and carefully examined," he added.
Last week, the International Monetary Fund (IMF) cut Russia's growth forecast for the year to 0.2 percent from 1.3 percent. On Wednesday, IMF mission chief to Moscow, Antonio Spilimbergo, said Russia was in a recession and that the country would suffer capital outflows of $100 billion in 2014.
Global policymakers voiced their concerns about how markets could react to intensified sanctions against Russia over the weekend. The head of the Organisation for Economic Co-operation and Development (OECD), Angel Gurria, told CNBC the situation was denting "systemic confidence" at a time when markets were already rocky.
Slovenia's recently resigned prime minister, Alenka Bratušek, told CNBC she was concerned there could be an escalation in events that would be bad for all involved: Russia, Ukraine and the European Union.
"A renewed political crisis (in Ukraine)...could have a negative impact on the European Union and consequently on Slovenia and our economy," Bratušek said at an OECD gathering in Paris. "And of course we don't want that after the recovery that we have witnessed lately."
Zoltán Cséfalvay, the Hungarian minister of state for the national economy, trod a careful line regarding the issue of more sanctions for the Russians. "We have to consider every step... we should be very careful in this case," he told CNBC at the OECD gathering.
He added that his country needed access to cheap energy and that there were a number of Hungarians living in Ukraine. "We have a common border to Ukraine, there are Hungarian minorities in Ukraine about 150,000, so this is a very sensitive issue for Hungary."
Bank of Japan Governor Haruhiko Kuroda added that, so far, global markets had been relatively untouched by the tensions—but he warned that any disruption in the energy market could have major global impact.
"We should be careful and mindful of continued risks if the situation worsens," Kuroda told CNBC at the ADB annual meeting in Kazakhstan.
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