The United States has imposed sanctions on the sovereign wealth funds of Russia and also froze their assets. As an active western move to punish Moscow for its involvement in the Ukraine Invasion, the US has forbidden all dealings with the Russian financial institutions. According to the US Treasury Department, these sanctions will strip Russian President Vladimir Putin of funds he requires for the Ukraine war.
In the opinion of Secretary of the Treasury Janet Yellen, “The unprecedented action we are taking today will limit Russia’s ability to use assets to finance its destabilizing activities and target the funds Putin and his inner circle depends on to enable his invasion of Ukraine.” Moreover, freezing the Central Bank of Russia will also weaken them financially amidst these sanctions and war. The target has been on the economic activity and banking system of Russia. In one of its statements, the Treasury said that the sanctions will “disrupt Russia’s attempts to prop up its rapidly depreciating currency by restricting global supplies of the ruble and access to reserves that Russia may try to exchange to support the ruble” The decision has been taken after consideration with the Allies. Thus, even UK, Canada, and European Union have announced the penalties they would impose on Russia’s central bank.
Canada’s finance minister has also given an opinion on this matter on Monday. He said, “This has never been done before at this scale – today we are taking a historic step by directly censuring Russia’s central bank. Russian banks have also been cut off from the SWIFT financial messaging system that could enable international transfers of money.
After months of keeping its troop at a standoff at Moscow, near the Ukrainian border, Russia had finally launched an all-out invasion on Ukraine on February 28, 2022. Initially, Russia had declined all the US and European allegations that it was planning an attack on Ukraine. “Political leaders made the right decision to cut selected Russian banks off of SWIFT as they did in 2012 when they cut Iranian banks off of SWIFT,” said Leonard Schrank, who was CEO of the organization for 15 years, including when the U.S. Treasury Department created a classified program to tap SWIFT data to track the flow of terrorist financing after the Sept. 11 attacks. More penalties against the central bank could come this weekend, according to a U.S. official. Russia has about $640 billion in reserves.