Ukraine War: This new move, along with other steps taken by US allies, will make it harder for the Russian central bank to use its vast reserves of hard currency to buy the ruble.
The United States on Monday banned all US transactions with Russia’s central bank with immediate effect, the Treasury Department said as it unveiled an unprecedented sanction to further punish Moscow for attacking Ukraine.
“This action effectively stabilizes any assets of the Central Bank of the Russian Federation held in the United States or by American individuals,” the Treasury said of the measure, taken in coordination with Western allies.
This would severely limit Russia’s ability to defend the ruble and grow its economy.
This new move, along with other moves by US allies, would make it harder for the Russian central bank to use its vast reserves of hard currency to buy the ruble.
A senior administrative official said that transactions to protect the ruble, which is now falling, “will no longer be possible and Fortress Russia will be exposed.”
The official said the coordinated sanctions package would create a “side effect feedback loop”.
“Inflation is likely to rise. Purchasing power is likely to decline. Investment is likely to decline,” the official said.
“Our aim is to ensure that the Russian economy goes backwards if President Putin decides to continue going forward with the invasion of Ukraine, and we have the tools to continue that,” the official told reporters.
The US on Monday also imposed sanctions on the Russian Direct Investment Fund, a state-owned entity that Russia uses to raise funds abroad. It is run by Kirill Dmitriev, who is close to Putin.
“This fund and its leadership are emblematic of deep Russian corruption and wielding influence globally,” the official said.
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