In late February, the European Central Bank deployed its most powerful financial weapon against Russian aggression; the US announced that the Federal Reserve would impose sanctions upon the Russian central bank.
This article by David Frum, writing for The Atlantic, makes the following points:
- The Federal Reserve and the European Central Bank moved hard, fast, and together.
- Central-bank sanctions are so devastating that they may do more damage than Western governments wish and bankrupt the entire Russian banking system.
- A partial cut-off is also hitting Russia from the 'Society for Worldwide Interbank Financial Telecommunication'', (SWIFT)system.
- SWIFT is a messaging technology that enables the safe and sure electronic transmission of funds.
- Despite Russia having around $630 billion in reserves, those reserves are controlled by foreign central banks; and if Russia’s foreign income slows while it is waging a costly war against Ukraine, it will need its reserves badly.
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