Digital Desk: Russia Swift Payments System : The US and European nations decided on Saturday to slap the most severe financial penalties yet on Russia for its continuous invasion of Ukraine, targeting the Russian economy's central bank reserves and cutting some Russian banks out from a critical global financial network.
The decision, made as Ukrainian forces fought to keep Russian troops out of Kiev and residents hunkered down in subway tunnels, basements, and underground garages, has the potential to spread the pain of Western retaliation for President Vladimir Putin's invasion to ordinary Russians far more widely than previous rounds of sanctions.
"Putin set out on the road to destroy Ukraine, but in doing so, he is also undermining the future of his own country," said EU Commission President
Ursula von der Leyen.
Since Russia launched its invasion late last week, the European Union, the United States, the United Kingdom, and other allies have progressively increased the severity of their sanctions.
While US and European officials have stated that they are still working out how to execute the new sanctions and that they want to exempt Russia's oil and natural gas exports, the sanctions might be among the most severe ever imposed on a country.
Moreover, if fully implemented, the regulations will substantially harm the Russian economy and severely restrict the country's capacity to import and export goods.
The steps were announced in a joint statement by the US and European allies as part of a fresh wave of financial penalties aimed at "holding Russia accountable and together ensuring that this conflict is a strategic failure for Putin."
The central bank limitations aim to restrict the Kremlin's more than $600 billion in reserves. In addition, they are intended to limit Russia's capacity to maintain the currency as it depreciates due to intensifying Western sanctions.
According to US officials, the moves taken on Saturday were designed to throw the ruble into "free fall" and foster skyrocketing inflation in the Russian economy.
The ruble's depreciation would very certainly cause inflation, hurting ordinary Russians and the Russian elites who were the original targets of the sanctions. Moreover, if Saturday's sanctions are as draconian as described, the resulting economic dislocation could lead to domestic political instability for Putin.
As Russians hurried to sell their targeted currency for safer assets, analysts projected increased Russian bank runs and decreasing government reserves.
According to US officials, previously announced sanctions have already impacted Russia, causing its ruble to fall to its lowest level against the dollar in history and its stock market to experience its worst week on record.
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