US imposes sanctions on Russian central bank, threatens further action

An exterior view shows the headquarters of the Central Bank of Russia in Moscow, Russia, March 29, 2021. A sign reads: ‘Bank of Russia’. REUTERS/Maxim Shemetov

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WASHINGTON, Feb 28 (Reuters) – The United States on Monday imposed sanctions on Russia’s central bank and other sources of wealth, dealing a blow to the country’s economy and further punishing Moscow for its invasion of the ‘Ukraine.

The measures, preventing Americans from engaging in transactions involving the Russian central bank, the Ministry of Finance or the national wealth fund, are likely to drive up Russian inflation, cripple its purchasing power and reduce investments, U.S. officials said Monday as the new measures took effect. .

The actions included an exception for energy payments.

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Washington last week imposed several rounds of sanctions, including on Russian President Vladimir Putin and major banks, after Russian forces invaded Ukraine in the biggest assault on a European state since World War II.

“Our goal is to ensure that the Russian economy shrinks if President Putin decides to continue moving forward with an invasion of Ukraine, and we have the tools to continue to do so,” he said on Monday. urges a senior US administration official.

Washington and its allies said on Saturday they would take action against the central bank and exclude some of Russia’s banks from the international payments system SWIFT, a list that officials said was still being finalized with partners in the EU. Read more

Russia’s central bank more than doubled its key rate on Monday and introduced capital controls, but its governor said the sanctions had prevented it from selling foreign currency to prop up the rouble. Read more

The US official said that when Russia was planning its invasion of Ukraine, it expected to be able to use its central bank assets to mitigate the impact of sanctions, and since Saturday’s announcement it had been trying to route those assets to Russia or to refuges.

Monday’s measures “immobilized” all assets the Russian central bank held in the United States, hampering Russia’s ability to access hundreds of billions of dollars in assets, the official said.

“Putin’s war chest of $630 billion in reserves only matters if he can use it to defend his currency, including selling those reserves in exchange for buying the ruble,” he said. a second senior administrative official.

“After today’s action, this will no longer be possible and ‘Fortress Russia’ will be exposed as a myth.”

Mark Sobel, a former senior Treasury official who serves as US chairman of the OMFIF forum for central banking, economic policy and public investment, said the action was a “tremendous example of Western unity”.

“This all happened overnight, and the strength of it essentially cut off an important country from the global financial system,” Sobel told Reuters.

The U.S. Treasury Department said in a statement on Monday that it had also imposed sanctions on a Russian sovereign wealth fund, the Russian Direct Investment Fund (RDIF), which markets Russia’s Sputnik V COVID-19 vaccine globally. international, and its management company.

Its director general, Kirill Dmitriev, accused by Washington of being a close ally of Putin, was also targeted.

The RDIF said in a statement that it had not been involved in political activities and said the restrictions could complicate its promotion of Sputnik V.

“The imposition of sanctions against the RDIF, which since its inception has stood for the establishment of international relations and the support of constructive ties, demonstrates that the United States has chosen the path to destroy constructive dialogue between countries,” reads -on in his press release.

Neutral Switzerland imposed sanctions on Russia on Monday, and Singapore also said it would take action against Moscow. Read more

ENERGY SUPPLIES

The Treasury issued a blanket license alongside Monday’s action allowing certain energy-related transactions until June 24.

President Joe Biden’s administration fears its sanctions could drive up already high gas and energy prices and has taken steps to mitigate that.

Officials said Washington would continue to adjust its measures against Russia to limit the impact felt at home and enable a stable energy supply in world markets.

They also warned that the United States would not hesitate to take further action against Russia and was actively exploring measures that would cut Russia off from the critical technologies it needs to remain a major energy producer in the longer term. citing similar measures already taken by the European Union. Union.

They said Washington was also watching Belarus closely, adding that the Russian ally could face more punitive measures if it continues to help Moscow in the invasion.

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Reporting by Daphne Psaledakis, Steve Holland, Andrea Shalal and Susan Heavey; Additional reporting by Josephine Mason in London; Editing by Mary Milliken, Nick Zieminski and Howard Goller

Our standards: The Thomson Reuters Trust Principles.

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