The United States and its European allies agreed Saturday to new economic sanctions on Russia, blocking its access to the global financial system and restricting its central bank as retaliation for waging war in Ukraine.
The US, European Union and UK cut some Russian banks out of the SWIFT international payment system, which moves billions of dollars a day between some 11,000 financial institutions.
Western allies also restricted access to $600 billion in Russian Central Bank reserves, a move that was expected to send the value of the ruble plummeting while inflation soars.
The measures were the harshest sanctions on any country in modern times and were meant to “hold Russia to account and collectively ensure that this war is a strategic failure for (Russian President Vladimir) Putin,” according to a joint announcement.
The fine print of the penalties was still being discussed as officials worked to limit the fallout on other economies and purchases of Russian energy.
Ejecting Russia from SWIFT was considered by the US and its allies in 2014 when the country annexed Crimea and backed eastern Ukraine separatists. At the time, Russia said the ban would be tantamount to a declaration of war, and the move was shelved by allies — who were criticized for a weak response to the invasion.
The Western bloc said the SWIFT disconnection would initially be partial, leaving room for further escalation. The EU also moved to “paralyze the assets of Russia’s Central bank,” freezing transactions.
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“Cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports,” EU Commission President Ursula von der Leyen said. “Putin embarked on a path aiming to destroy Ukraine, but what he is also doing, in fact, is destroying the future of his own country.”
The Russian stock market nosedived to historic lows this week amid earlier rounds of economic sanctions.