Global sanctions against Russia have come in waves. Europe and the U.S. recently introduced five more powerful sanctions against Russia. In addition, the White House has also introduced a new set of sanctions aimed at placing Russian-held cryptocurrencies on the sanctions list. In the early morning of Feb. 27, the U.S., UK, Canada, France, Germany, Italy, and the European Commission issued a joint statement announcing five sanctions against Russia.
Firstly, some Russian banks were excluded from the SWIFT messaging system, causing them to lose their connection to the global financial system. There are five Russian banks excluded from the SWIFT payment system this time, and Europe and the United States will stop providing Apple Pay and Google Pay services for bank cards issued by these five banks. According to European Commission President Ursula von der Leyen, “This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.”
Secondly, the group pledged to enact restrictive measures to prevent the Russian Central Bank from using its international reserves to undermine the effectiveness of the sanctions.
Thirdly, preventing the provision of “golden passports” to Russians. The so-called “golden passport” is one of the most powerful passports globally. Holders of this passport can immediately live and work in any member state of the European Union. The sanction seeks to prevent “wealthy Russians,” those with ties to the Russian government, from accessing the groups’ financial system.
Fourthly, to ensure the sanctions implication, the group will impose “sanctions and other financial and enforcement measures” and freeze assets of “additional Russian officials and elites close to the Russian government, as well as their families, and their enablers” within their jurisdictions.
Fifth, the U.S. and its allies aim at better “coordination against disinformation and other forms of hybrid warfare.”
The U.S. sanctions on Russia expands to digital currency
According to a CCTV Finance report on Feb. 25, Russia has up to $1 trillion of “Dark Money,” or hidden money, overseas, which might make financial sanctions more difficult.
Wall Street Journal reported Marlon Pinto, director of investigations at London-based risk advisory firm “AnotherDay,” said, compared to most other nations, cryptocurrencies make up a more significant part of Russia’s financial system due to a distrust in its banking system.
A Russian government report estimates that Russian citizens own more than 12 million cryptocurrency wallets, where the digital assets are stored, with the funds amounting to about $23.9 trillion.
To make Putin suffer from significant economic sanctions, a U.S. official from the Biden administration told Wall Street Journal that Washington is considering a new area of additional sanctions against Russia—cryptocurrencies.
IMF supports Ukraine
The Director-General of the International Monetary Fund (IMF), Kristalina Georgieva, said the IMF would support Ukraine. The European Central Bank also said it would do its best to stabilize prices and the financial system.
Georgieva said that the IMF is working on additional financial support programs for Ukraine, including under the remaining capacity of about $2.2 billion in Ukraine’s existing $5 billion standby loan arrangement.
She added that the IMF is ready to work extensively with international partners, including the World Bank, to assist IMF member countries affected by the Russia-Ukraine war.
She said Western sanctions against Russia would certainly stimulate the rise in energy and grain prices and impact the global economic recovery;
Moreover, the global financial system may also be destabilized by the effects of war. For example, data shows that Russia’s invasion of Ukraine is causing a global food price spike.
European Central Bank President Christine Lagarde said on Feb. 25 that it is too early to predict the economic impact of the war between Russia and Ukraine. Still, the war may affect consumer spending and investment sentiment for the time being.