2 years ago
The Treasury Department will no longer allow Russia to make payments on its debt using dollars held at U.S. banks, in the latest effort to choke off financial resources for President Vladimir Putin’s invasion of Ukraine.
The Treasury had already moved to freeze Russian government assets held at U.S. institutions, but now it won’t allow Moscow to access those dollars even to meet its obligations to its bondholders, moving the government nearer to default. Its latest payment was due Monday.
“Beginning yesterday, the U.S. Treasury will not permit any dollar debt payments to be made from Russian government accounts at U.S. financial institutions,” a Treasury spokesperson said Tuesday in a statement. “Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default.”
“This will further deplete the resources Putin is using to continue his war against Ukraine and will cause more uncertainty and challenges for their financial system,” the spokesperson said.
Although the Kremlin is currently cut off from accessing financing from Western markets, a default would further complicate future efforts to rebuild its connections to the global economy.
The announcement comes as pressure has built for Western economies to ratchet up sanctions on Russia for the apparent massacre of Ukrainian civilians, prompting President Joe Biden to repeat that Putin is a war criminal.
English (US)