This chapter examines how Western sanctions affected the development of the Russian financial system. The first section gives a brief overview of the key characteristics of the Russian financial system and the role that it performs in the economy. In the second section, the broad contours of the financial system’s relationship with the global economy are presented. Section three contains a description of the financial sanctions imposed in the summer of 2014. A fourth section traces the evolution of the Russian government policy response, while the fifth section provides an assessment of how the adaptive measures initiated by the Russian government since 2014 helped reduce the impact of sanctions. The impact of sanctions on the financial system was considerable, albeit difficult to estimate in precise terms due to the complicating effect of the sudden and sharp fall in oil prices that occurred alongside sanctions. In the short term, financial sanctions appeared to generate the most pain. However, as in the energy and defense industries, the Russian policy response moderated the impact of sanctions. Adaptive measures taken by policymakers after 2014 created the conditions for a more self-reliant financial system.