LAHORE MIRROR (Monitoring Desk)– The Biden administration announced additional sanctions against Russia’s central bank on Monday, a move that effectively prohibits Americans from doing any business with the bank as well as freezes its assets within the United States.
The new measures will also target the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation.
“We wanted to put these actions in place before our markets open because what we learned over the course of the weekend from our allies and partners was the Russian Central Bank was attempting to move assets and there would be a great deal of asset flight starting on Monday morning from institutions around the world,” the official said, on a conference call with reporters.
“Our strategy to put it simply is to make sure that the Russian economy goes backward. As long as President Putin decides to go forward with his invasion of Ukraine,” the official added.
The U.S. is also adding Kirill Dmitriev, another ally of Russian President Vladimir Putin, to the sanctions list as well as the direct investment fund Dmitriev heads. The Russian Direct Investment Fund, or RDIF, is officially a sovereign wealth fund but is widely considered a slush fund for Putin.
The official said the U.S. expects its allies to take similar steps in the coming days.
“No country is sanctions-proof and Putin’s war chest of $630 billion in reserves only matters if he can use it to defend his currency,” a second senior administration official said Monday.
The U.S. and its allies have imposed a deluge of severe sanctions on Russia in recent weeks in a unified effort to keep economic pressure on the Kremlin.
Those penalties – imposed by the U.S. departments of the Treasury and Commerce – have sent the Russian markets sideways. The Russian ruble fell as low as 111 on Monday to the U.S. dollar from 83 on Friday, a drop of more than 20%. If that weakening holds, it would represent one of the largest single-day declines in the value of Moscow’s currency ever recorded.
The Bank of Russia, the nation’s central bank, stepped in to stanch the ruble’s swoon by more than doubling the country’s benchmark interest rate to 20% from 9.5%. The hike in rates is designed to tempt savers to keep cash in Russian banks since the West and its allies have moved to isolate Moscow’s biggest lenders from international markets.
The major market-based upheaval prompted the Russian central bank to keep the country’s stock exchange, the Moscow Exchange, closed Monday.
On Saturday, the U.S., European allies and Canada agreed to remove key Russian banks from the interbank messaging system, SWIFT, an extraordinary step that will sever the country from much of the global financial system.
Moscow’s exclusion from SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, means Russian banks won’t be able to communicate securely with banks beyond their border. Iran was removed from SWIFT in 2014 after developments to Tehran’s nuclear program.
SOURCE: CNBC
