US effectively freezes Russian central bank assets held by Americans

The United States said it was blocking financial transactions of Russian central bank assets, freezing all such assets held by Americans.

The freeze is effective immediately, a senior administration official said Monday during a briefing for reporters. The official said the US actions are in conjunction and cooperation with the European Union, Japan, the United Kingdom, Canada and others. This means that not only will Russia not be able to access funds in US dollars, but it will not be able to use dollars in other countries that are moving to other banks and other currencies.

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By making the decision effective immediately, before markets open, the official said, Russia will not be able to move assets to avoid or mitigate the consequences.

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“Our strategy,” the official said, “is to ensure that the Russian economy shrinks as long as President Putin decides to continue his campaign.”

Russian President Vladimir Putin held a meeting with economic advisers on the global sanctions hitting his country, calling the West an “empire of lies”. Among those present at the Kremlin meeting were Russian Central Bank Governor Elvira Nabiullina, First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister Alexander Novak and Finance Minister Anton Siluanov.

Russian President Vladimir Putin chairs a meeting on economic issues at the Kremlin in Moscow on February 28, 2022. (ALEXEY NIKOLSKY/SPOUTNIK/AFP via Getty Images/Getty Images)

The intended effect, the official added, is to cripple Russia’s economy and deplete the country’s “rainy day fund” as their currency, the rouble, plummets. This rainy day fund was set up to defend against the economic consequences when Russia invaded Crimea in 2014.

According to the Treasury Department’s Office of Foreign Assets Control (OFAC), this is not a complete and total central bank block, because OFAC authorizes certain transactions with Russia’s central bank that are ” related to energy”, and that additional authorizations could follow if necessary.

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Russian Presidential Assistant Maxim Oreshkin (R) and Russian Central Bank Governor Elvira Nabiullina attend a meeting on economic issues hosted by Russian President Vladimir Putin at the Kremlin in Moscow, February 28, 2022. (Alexei NikolskyTASS via Getty Images/Getty Images)

The Treasury Department also announced that it was blocking the Russian Direct Investment Fund, its management company and one of the company’s subsidiaries, which would block “another way in which Russia has benefited from access to the American financial system.

The Treasury Department also said it was sanctioning the CEO of the Russian Direct Investment Fund, Kirill Dmitriev, a close Putin ally who represented him to US institutions.

Russian Direct Investment Fund CEO Kirill Dmitriev at the Russian Presidential Academy of National Economy and Public Administration, January 13, 2022. (Sergei FadeichevTASS via Getty Images/Getty Images)

“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities and will target funds that Putin and his entourage depend on to enable his invasion of Ukraine,” he said. Treasury Secretary Janet Yellen in a statement. “Today, in coordination with our partners and allies, we are delivering on key commitments to restrict Russia’s access to these valuable resources.”

The US and its allies are also set to block some Russian financial institutions from the SWIFT international financial system, cutting them off from the world.

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The senior administration official said Monday morning that the list of Russian banks that will be cut off from SWIFT will be finalized by the European Union, with SWIFT being under the authority of Belgium.

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