March 2, 2024

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The United States wants to shut down Russia’s central bank

(Washington) The United States on Monday imposed an unprecedented sanctions on Russia’s central bank, which they intend to reduce to immaturity in response to the Ukraine invasion.

Released at 8:19 p.m.
Updated at 10:07 am.

Washington has immediately banned any transactions with the Russian currency, the Treasury Department said before opening US markets.

“This decision has the effect of immobilizing all assets held by the Central Bank of Russia in the United States or held anywhere by American persons,” the U.S. Treasury said in a statement.

In fact, the decision would severely restrict Moscow’s ability to use its large foreign exchange reserves to buy the ruble in the face of similar sanctions by several US allies.

Canada followed in the footsteps of the United States in making a similar decision.

“From now on, any Canadian financial institution will be barred from dealing with the Russian Central Bank. This will prevent Russia from maintaining its international monetary reserves and further restrict Putin’s ability to finance his chosen war, “said Canadian Prime Minister Justin Trudeau.

According to official data, Russia had $ 643 billion in foreign exchange reserves over the past weekend, with oil and gas revenues reaching a record high.

However, it is unknown at this time what he will do after leaving the post.

The new restrictions imposed by the US and its allies on the sale of the ruble to Russia are aimed at undermining the country’s ability to support its currency in the face of new restrictions on its finances.

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Unprotected “Fortress Russia”

A senior official of the US administration commented during a conference call that these measures to protect the already declining Russian currency were “no longer possible and ‘Fortress Russia’ would be insecure.”

He estimated that these combined sanctions would trigger a “vicious circle” for the Russian economy, and predicted that “inflation will certainly rise, purchasing power will fall and investments will fall.”

“Our goal is to ensure that the Russian economy shrinks until President Putin decides to move forward with the invasion of Ukraine,” the senior official said.

The United States on Monday imposed sanctions against Russia’s direct investment fund, which is being run by Russia’s public finance company and a close ally of Russian President Krill Dmitry.

The source quoted above estimates that “this fund and its administration are signs of Russia’s deep corruption and its influence abroad.”

“This is an unprecedented permit,” Eddie Fishman, an expert on the Atlantic Council and American think tank, said on Twitter that Russia’s central bank could no longer sell foreign exchange reserves.

However, he points out that large Russian state-owned enterprises also have foreign exchange reserves. “If there is a need to intensify sanctions, it’s an element that needs to be monitored,” he added.

Against Western measures, the ruble fell. On Monday, it broke the all-time low against the dollar and the euro.

Russia’s central bank raised its key rate from 9.5 to 20% on Monday morning to protect the national currency, which has been hit hard by the economic downturn.

The Russian stock market has been closed for fear of collapsing, as elsewhere in the world.

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