The warning came after the bank admitted it had lost some pounds 335m over the last two weeks as a result of the crisis, most of if over the last few days.
Mr Taylor said it was "nonsense" to dismiss Russia as "an economy the size of Luxembourg ring-fenced from the rest of the world.
"You cannot have a major world economy defaulting without that creating shockwaves around the world," he said.
"The prospects for the world economy are materially worse than they were four weeks ago. It will lead to a contraction of credit. Bankers' natural reaction is to call a halt to lending," he said.
Two other banks disclosed big Russian hits yesterday. Nomura, the Japanese bank which is a big player in Eastern Europe, disclosed that it had lost $350m on its holdings in Russian treasury bills.
On Wall Street, Bankers Trust, which earlier this year bought the equity business of National Westminster Bank, said it expected to show a net loss in the third quarter after it went down $350m on its Russian trading book.
Salomon Smith Barney, the US investment bank, said late on Monday that it had lost $150m in the last two months.
Barclays estimated its total bank lending and net securities exposure to Russia was some pounds 340m, most of which was held by Barclays Capital, the debt trading operation run by Bob Diamond.
The group expects to take a charge of the order of pounds 250m to cover potential losses.
In addition Barclays reckons it has lost pounds 75m because of the collapse in emerging market debt trading worldwide since the Russian crisis, most of it over the last few days.
Mr Diamond said that there were no specific cutbacks planned as a result, but "anyone who is in this business right now who isn't reassessing the business ought to be."
Yesterday's warning from Barclays caught analysts by surprise. British bank exposure to Russia had been widely thought to be relatively modest compared to banks in Germany which collectively are the biggest holders of Russian sovereign debt, or the US investment banks.
Nick Collier, analyst at Morgan Stanley Dean Witter, said he would be cutting his forecast for the year by more than the pounds 340m, reflecting his concerns that Barclays Capital would now be allowed less capital to play with. He had been expecting pre-tax profits of pounds 2.63bn this year.
As well as being the biggest loss suffered by a British bank and the biggest disclosed by a major financial institution so far, Credit Suisse First Boston, one of the biggest players in the Russian debt market, is thought to have lost $400-$500m.
Barclays has written down its entire stock of Russian debt by 80per cent in the case of dollar-denominated debt and 90 per cent for rouble debt, reflecting the fact that the Russian currency has halved in value in the last few days.
"Our position has got worse to the tune of pounds 100m since Wednesday," said Mr Taylor, adding that Barclays was possibly the most heavily exposed of British banks.