Ukraine-Russia War: Latest News and Live Updates

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The Treasury Department on Monday moved to further cut Russia off from the global economy, announcing it would freeze Russian Central Bank assets held in the United States and impose sanctions on the Russian Direct Investment Fund, a sovereign wealth fund. run by a close ally of President Vladimir V. Putin.

These measures are intended to limit Russia’s ability to use its war chest of international reserves to mitigate the impact of sanctions that the United States and European allies have adopted in response to Russia’s invasion of Ukraine. .

“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities and will target funds that Putin and his entourage depend on to enable his invasion of Ukraine,” he said. Treasury Secretary Janet L. Yellen in a statement. declaration.

Russia has spent the past few years bolstering its defenses against sanctions, amassing $643 billion in foreign exchange reserves in part by siphoning off its oil and gas revenues. The new restrictions imposed by the United States and its allies against the sale of rubles to Russia aim to undermine the country’s ability to support its currency in the face of new sanctions imposed on its financial sector.

As a result of the sanctions, Americans cannot participate in any transactions involving the Russian Central Bank, the Russian National Wealth Fund or the Russian Ministry of Finance.

All Russian central bank assets held in US financial institutions are now blocked, and financial institutions outside the US that hold dollars for the Russian central bank cannot move them. Because the United States acted in coordination with its European allies, Russia’s ability to use its international reserves to back its currency has been limited.

It’s unclear how much of Russia’s foreign exchange reserves are held in U.S. dollars, and Biden administration officials declined to provide an estimate during a briefing with reporters on Monday.

Senior Biden administration officials said the actions were effective immediately. They noted that the value of the Russian ruble had already fallen more than 30% over the weekend and that the Russian central bank had more than doubled its interest rate in an attempt to mitigate the fallout. They also predicted that inflation would soon soar and economic activity would contract as the country’s currency lost value.

These measures represent a significant escalation of US sanctions, although the Treasury Department said it was granting an exemption to ensure that transactions related to Russia’s energy exports can continue. It issues a “general license” to authorize certain energy-related transactions with the Central Bank of Russia.

The exclusion means that energy payments will continue to flow, mitigating risks for global energy markets and Europe, which is heavily dependent on Russian oil and gas exports. US officials have said they want energy prices to remain stable and do not want a price spike to benefit Mr Putin, but noted they are considering measures that would prevent the Russia to acquire the technology it needs to produce energy. long-term leader.

The measures announced Monday grew out of lessons the United States has learned since imposing sanctions on Russia following its 2014 annexation of Crimea. A senior Biden administration official said Mr Putin began to amass international reserves after 2014 to mitigate the impact of future sanctions. and that the United States, in preparing to exert further pressure on the Russian economy, determined through months of preparation with European allies that it should directly target the Russian central bank.

“The United States and other Western economies have deployed a very potent set of financial weapons against Russia with remarkable speed,” said Eswar Prasad, an economics professor at Cornell University and former head of the Monetary Fund. international. “Cutting off access to global financial markets and a country’s war chest of international reserves held in the currencies of Western economies is a crippling financial blow, especially to an economy like Russia’s that depends in such a large measure of export earnings.

The sanctions also replicate some of the economic warfare the United States has used against Iran in recent years, which included sanctions against its central bank and the blocking of its financial institutions from the SWIFT financial messaging system.

On Saturday, the European Commission, Britain, Canada, France, Germany, Italy and the United States said they would remove some Russian banks from SWIFT, essentially excluding them from international transactions, and impose new restrictions on the Central Bank of Russia to prevent it from using its large international reserves to circumvent sanctions.

Biden administration officials said on Monday that the full list of Russian banks that are cut off from SWIFT is still being finalized in coordination with European countries.

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