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The United States blocked dollar debt payments on Monday from Russian accounts at US banks, raising the risk of a default by Moscow once again.
US Treasury stopped the Russian government from paying holders of its sovereign debt with the more than $600 million of dollar reserves held at US financial institutions.
Foreign currency reserves held by the Central Bank of Russia at US banks had been frozen under the sanctions imposed on the country. The Treasury Department, though, had allowed Russian government to use the funds to make coupon payments on dollar-denominated debt on a case-by-case basis.
The US government decided to halt Russia’s access to funds as a $552.4 million principal payment on a maturing bond and an $84 million coupon payment on a 2042 sovereign dollar bond came due on Monday.
According to a US Treasury spokesperson, the move was meant to force Moscow to make the decision about whether it would use dollars that it has access to for payments on its debt or for other purposes, including supporting its war effort, Reuters reported.
"Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default," the spokesperson said.
Picture Credits: Reuters