Latest news from Russia and Ukraine: Western allies to exclude some Russian banks from Swift payment system – live | world news
Russia has become a “global economic and financial pariah”, a senior US administration official told the Guardian’s diplomatic editor Julian Borger.
Speaking after Western allies announced new financial measures against Russia, including the withdrawal of some Russian banks from the global Swift payments network, the official said the measures were designed to target the Kremlin and linked individuals to the Russian government.
“We are going for their yachts, their luxury apartments, their money and their ability to send their children to posh western universities. We will also engage other governments, to detect and disrupt the movement of ill-gotten gains, and deprive these individuals of their ability to hide their assets in jurisdictions around the world,” the official said.
They said Russia’s 10 largest financial institutions had now been subject to sanctions – “holding almost 80% of the total assets of the Russian banking sector”.
As a result, the official said: “Russian government borrowing costs have more than doubled to almost 17%. Rating agency S&P downgraded Russia to junk status. Within 24 hours of our actions, demand for cash in Russia increased 58 times, according to reports, and the Russian government rushed to exhaust its own resources to try and shore up its banks and currency. In short, Russia has become a global economic and financial pariah.
Russia reportedly has $630 billion in financial reserves stored abroad, in gold and cash, but the new sanctions would render that fund useless, the official said.
“You’ve heard of Fortress Russia, the $630 billion war chest of foreign reserves,” they said.
“It’s impressive, but it’s only impressive if Russia can use those reserves. And that means Russia must be able to sell those reserves and buy rubles to support its currency. And so what we are committing to do here is to disarm the central bank. And the way we can do that, for example, is to ban the US, EU and UK from selling rubles to the Central Bank of Russia. This very simply means that the Russian Central Bank cannot support the ruble, period, and it means that our sanctions will have much more force.
The US official said the list of Russian banks to be removed from Swift would ultimately be decided by the EU, but said the US would “work closely” with European countries “to finalize this list.”