US bans any transaction with the Central Bank of Russia

The United States has banned all transactions with the Central Bank of Russia, the Treasury Department announced, a sanction of immediate effect and of unprecedented severity taken in coordination with several of Washington’s allies, in response to the invasion of Ukraine.

The two economic sanctions imposed by the United States and its allies on Russia’s central bank and other key sources of wealth are likely to increase Russian inflation, cripple its purchasing power and reduce investment, U.S. officials said on Monday as the new measures were announced.

The country has faced retaliatory measures from the West since it started a war against Ukraine last week.

“This decision has the effect of immobilizing all assets that the Central Bank of Russia has in the United States or that are in the hands of American citizens,” reads a statement, which will considerably limit Moscow’s ability to defend its currency and support its economy. .

Talks between Russian and Ukrainian officials began at the Belarusian border on Monday, as Russia faced deepening economic isolation four days after invading Ukraine in the biggest attack on a European state since World War II.

The US Treasury Department in a statement on Monday said it had also imposed sanctions on a major Russian sovereign wealth fund, the Russian Direct Investment Fund.

The United States and its allies announced they would take action against Russia’s central bank on Saturday, in a move that experts saw as a significant escalation of Western sanctions against Moscow.

A senior US official said the move immobilized any assets Russia’s Central Bank held in the United States, in a move that will hamper Russia’s ability to access hundreds of billions of dollars in assets.

The Treasury issued a general license along with Monday’s action authorizing certain energy-related transactions through June 24.

The administration of President Joe Biden has been concerned that its sanctions could increase already high gas and energy prices and has taken steps to mitigate this.

Officials also warned that the United States would not hesitate to launch further sanctions against Russia and that it was closely watching Belarus’ involvement, adding that Russia’s strong ally could face further consequences if it continued to assist Moscow in the invasion.

On Monday, the price of the Russian currency collapsed against the dollar and the euro during the opening of quotations on the Moscow Stock Exchange. The Russian currency was trading at 94.15 to the dollar around 10 am, down from 83.5 on Wednesday, the last day an official exchange rate was recorded before the invasion of Ukraine. Against the euro, the ruble was trading at 105.43 per euro, from a previous level of 93.5.