While the rest of the world is experiencing an economic turnaround after the disastrous effects of the Great Recession, it appears Russia isn't in that conversation. The country is in the throes of a complete financial crisis, based largely on the declining value of the ruble, Russia's native currency, oil prices and Western-imposed sanctions.

According to a report from The Moscow Times, in 2014, 30 of Russia's banks became insolvent. Because of this, the Russian government will assume control of the remaining financial institutions in the country in an attempt to reverse this damaging trend.

"The state will capitalize the banks and increase its stake in them, and the banks will buy industrial enterprises and become financial-industrial groups," German Gref, Russia's former minister of economic development and current CEO of Sberbank, the country's largest bank, told The Moscow Times. "All our economy will be state-run."

Prelude to a collapse
In March 2014, Russia implemented a military annexation of Crimea, a recognized territory of Ukraine. This move prompted a largely negative response from many nations, including the U.S. resulting in heavy sanctions being placed on Russia, which included a ban on foreign lending to state-owned banks in the country and the freezing of its assets, according to an Investopedia report. In addition, a significant drop in the global price of oil also contributed to the eventual collapse of the Russian banking system.

Russia is the top producer of oil in the world, with an output of more than 10 billion barrels per day. In a report from the Barents Observer, citing data from the Organization of Petroleum Exporting Countries, or OPEC, Trude Pettersen wrote lower oil prices and the aforementioned sanctions will result in Russia reducing its production efforts by 70,000 barrels daily and its foreign exports by 60,000 barrels.

At present, the price of one barrel of Russian oil is $50. One year ago, this figure was close to $100.

To offset such significant financial losses, the government moved to raise the cost of consumer goods in the country and cease the import agricultural items originating from foreign lands. However, this resulted in the creation of severe inflation in the country, which was pushed to 9.1 percent last year, the highest recorded inflation rate since 2011.

The solution
To help re-stabilize both the economy and the Russian financial sector, The Financial Times wrote the country is in the process of creating what is referred to as a bad bank. This financial institution would assume control of loans in the country that are considered nonperforming, which would help free up lending and provide a boost to its financial sector. Although the measure is yet to be approved, it is one that the country is exploring and seriously considering implementing.

"In Russia, this would be a precedent," Dmitry Poliakov, who serves as a senior credit analyst at Sberbank, told Bloomberg Business. "We had some discussions about setting up a bad bank after the 2008 crisis, but then there was a V-shaped recovery. Now people are preparing for a much more protracted banking crisis."

Advancements in these discussions comes on the heels of Russia's new credit rating issued by Standard and Poor's. The Financial Times reported that the S&P had given the country junk status based on the following reasons: "Asset quality in the financial system will deteriorate given the weaker ruble; restricted access of key areas of the economy to international capital markets due to sanctions; and economic recession in 2015."

Russia's anti-crisis plan is currently still in the development stages. However, the country must act quickly to dig itself out of the bad financial state it is currently in.