February 28, 2022–The United States added Russia’s central bank to its list of targeted sanctions against that country’s war on Ukraine.
As a result, Americans are barred from doing any business, such as purchasing bonds, with Russia’s central bank. The block on the secondary market for ruble or non-ruble denominated bonds for U.S. investors goes into effect immediately. Furthermore, the U.S. Treasury imposed sanctions on Russia’s National Wealth Fund, its Ministry of Finance, and the Russian Direct Investment Fund, its CEO and two of its subsidiaries.
Global Sanctions in Action
Banks around the world started implementing sanctions imposed not only by the United States, but also the European Union, United Kingdom, Canada, Australia and others. Russia is likely pinning its hopes on other countries, such as the other BRICs members, Brazil, India and China, to pick up the slack. However, Reuters reports today that “are treading cautiously for fear of tripping on the sanctions.”
Ruble Falls Below One Cent
Under pressure from all the sanctions and geopolitical pressures, the Russian ruble fell to its lowest level in history, to below one US cent.
A Beijing-Based SWIFT-Like System?
Beijing is reportedly building a financial system intended to run as an alternative to the SWIFT payments system. Europe and the United States have so far blocked a few Russian banks from SWIFT. It’s too soon to predict how the complex world of international finance will reshape in light of Russia’s war.
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