(Bloomberg) — The US is weighing sanctions on Russia’s central bank, according to people familiar with the matter, a move that would target the $643 billion in reserves that Russian President Vladimir Putin accumulated before the invasion of Ukraine. Was.
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A final decision has not been made, but the Biden administration is immediately considering all options to protect Putin from further devastation in Ukraine, the people said, speaking on condition of anonymity. He said the US aims to work with allies across Europe to take every step to maximize impact.
It’s not clear how advanced those discussions are. However, according to a person familiar with the matter, the issue of potentially targeting the Russian central bank came up in a conversation in late January.
A White House National Security Council spokeswoman declined to comment. The Bank of Russia did not immediately respond to a request for comment.
While Russia continues to reduce dependence on foreign currency, the central bank held 16.4% of its holdings in dollars at the end of June 2021, according to the latest official data, down from 22.2% a year earlier. The share of the euro was up 32.2%.
According to Tim Ashe, strategist at Bluebay Asset Management in London, the move would be “disastrous” for Russia. “We will see the ruble crash.”
While the decision would be without precedent for an economy the size of Russia, the US has previously cleared opponents’ central banks. In 2019, the Treasury Department blacklisted the monetary authorities of Iran and Venezuela for funneling money that supported volatile activities in the respective sectors. North Korea’s central bank is also blacklisted.
Losing access to funds abroad could handcuff Russia’s central bank as it tries to shore up the ruble in the foreign exchange market by selling hard currency. The direct intervention was announced earlier this week after Putin ordered an attack on Ukraine, marking the first time the Bank of Russia entered the market since 2014.
Russia also kept 22% of its billboards in gold, most of which is held domestically and would be out of reach of Western sanctions, while the central bank held about 13% in the yuan.
The US is seriously considering whether to seek Russia’s expulsion from the SWIFT financial messaging system over its invasion of Ukraine, Bloomberg News reported on Friday, as allies in Europe warm to the idea of imposing a penalty, Bloomberg News reported. Told on Friday.
Biden administration officials are now debating whether an EU directive is needed to ban Russia from SWIFT, although a US and EU decision is not imminent.
White House Press Secretary Jen Psaki said in a tweet that the Treasury Department would also impose a full blockade ban on the Kremlin-backed Russian Direct Investment Fund, aimed at “attracting capital into the Russian economy in high-growth regions.”
Marshall Billingsley, who served in the Treasury’s sanctions unit during the Trump administration, said, “It appears that the Biden administration is slowly coming to adopt the real harsh sanctions that it should have put in place a few days ago.”
(Update with additional context starting with the sixth paragraph.)
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