The Treasury Department has taken the latest action to prohibit Americans from transacting with Russia’s Central Bank or its National Wealth Fund. The U.S. sanctioned Kirill Dmitriev (the Russian Direct Investment Fund CEO), as well as the Russian President Vladimir Putin’s close ally.
According to the Treasury Department, it issued a “general licence” to allow certain transactions relating to energy with the Russian Central Bank.
Janet Yellen, Treasury Secretary, stated in a statement that “the unprecedented action we’re taking today will significantly limit Russia’s ability to use assets for its destabilizing actions and target the funds Putin & his inner circle depend upon to enable his invasion Ukraine.”
Biden’s move targets what a senior administration called Putin’s war chest, which consists of $630 billion worth of foreign reserves. According to a senior administration official, the United States and its European allies have committed to “disarming” the Central Bank. This includes preventing Americans from selling rubles to it.
The U.S. and European allies have swiftly acted since Russia’s invasion of Ukraine. They have placed sanctions to block Russia from the global economic system and financial system. Sanctions were aimed at a number of Russian financial institutions, including its two biggest banks and Russian oligarchs close to Putin. The Biden administration and its allies announced that it would sanction Putin on Friday. On Saturday, the United States, European Union, and the United Kingdom announced that they had agreed to remove certain Russian banks form the SWIFT financial message system.
Monday’s statement by a senior official of the administration stated that the bank list that will be removed is still being finalized.
Officials noted that the measures are immediate in effect and have already had an impact with the ruble being 30% weaker, and the Central Bank increasing its interest rate by doubling its current rate. They forecasted that inflation would rise and investment would plummet.
