WASHINGTON (AP) — The United States, European Union & United Kingdom on Saturday agreed to put in place crippling sanctions on the Russian financial sector, including a block on its access to the global financial system & for the first time, restrictions on its central bank in retaliation for its invasion of Ukraine.
The measures were announced jointly as part of a new round of financial sanctions meant to “hold Russia to account and collectively ensure that this war is a strategic failure for (Russian President Vladimir) Putin.” The central bank restrictions target the more than $600 billion in reserves that the Kremlin has at its disposal, meant to limit Russia’s ability to support the ruble amid tightening Western sanctions.
Cumulatively the steps announced by the West since Russia began the invasion would potentially amount to some of the toughest sanctions on any country in modern times & if fully carried out as planned, would severely damage the Russian economy & markedly constrain its ability to import & export goods.
U.S. officials said Saturday’s steps were framed to send the ruble into “free fall” & promote soaring inflation in the Russian economy. They noted that previously announced sanctions have already had an impact on Russia, bringing its currency to its lowest level against the dollar in history and giving its stock market the worst week on record.
The decline of the ruble would likely cause higher inflation, which would hurt everyday Russians & not just the Russian elites who were the targets of the original sanctions. It would be a substantial widening of the economic pain.
Saturday’s move includes cutting key Russian banks out of the SWIFT financial messaging system, which daily moves countless billions of dollars around more than 11,000 banks & other financial institutions around the world. The fine print of the sanctions was still being ironed out over the weekend, officials said, as they work to limit the impact of the restrictions on other economies & European purchases of Russian energy.
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