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• The sanctions would cut banking transactions between Russian and US banks
• Certain Russian entities would be barred from the US banking system
The Biden administration has put up a fresh list of sanctions against Russia barring US financial institutions from proceeding with any transactions with Russia.
Reuters reported that the measures would only be implemented if Russia invades Ukraine.
The report also mentioned that these sanctions aimed to hurt the Russian economy by cutting the "correspondent" banking relationships between targeted Russian banks and US banks that enable international payments.
Other prohibitory measures
The US would also place certain Russian individuals and companies on the Specially Designated Nationals (SDN) list, barring them from the U.S. banking system, banning their trade with Americans and freezing their U.S. assets, reported Reuters.
In addition to these new sanctions against Russia, President Joe Biden also signed an executive order that banning Americans from getting involved in any new investment, trade and financing to, from, or in the so-called Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine.
Read more: Oil prices rocket to seven-year highs amid Russia-Ukraine stand-off
“To be clear, these measures are separate from and would be in addition to the swift and severe economic measures we have been preparing in coordination with allies and partners should Russia further invade Ukraine,” White House press secretary Jen Psaki wrote in a statement announcing the executive order.’
Effect of sanctions
Most of the global transactions take place in dollars. Reuters reported that the sanctions would target banks by making it difficult to transact in U.S. dollars.
Despite that, the sanctions are unlikely to deter Russia from going ahead with its invasion plans as the country had nearly $635 billion in gold and forex reserves as of early February.
While possible Western sanctions against Russian banks could lead to a surge in market volatility, Russia is likely to be able to withstand restrictions due to its abundant reserves, Russian Finance Minister Anton Siluanov told Reuters last week.
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Inputs from Reuters