Toughest Sanctions Unveiled By Russian Central Bank

The head of Russia's central bank, Elvira Nabiullina, shared in an interview with RBK that Moscow had been anticipating Western sanctions since 2014 amid the Ukraine conflict. These sanctions, particularly the seizure of Russian assets, including those of private investors, and constraints on international payments, have been among the most impactful measures.

According to Nabiullina, the central bank had been evaluating the possibility of sanctions since 2014 and had prepared for several scenarios. When major banks faced sanctions, they had already taken steps to mitigate the impact, such as developing a national payment infrastructure, foreseeing the potential disconnection from SWIFT.

The US and the EU initially imposed sanctions following Crimea's joining of Russia after a referendum in response to events in Kiev in 2014. Last year, additional financial restrictions were placed due to Russia's military actions in Ukraine. These included measures like disconnecting Russian banks from SWIFT, restrictions on servicing dollar debt, freezing Russian assets abroad, and the withdrawal of Visa and MasterCard from the country. These sanctions severely limited Russia's ability to conduct international transactions in major currencies.

Nabiullina acknowledged that while many challenges in the financial sector were addressed, some issues, especially concerning cross-border payments, remained unresolved. The freezing of Russian assets globally, particularly by Western nations, was considered a violation of reserve security principles and had negative implications for central banks worldwide.

The freezing of assets affected numerous individuals not subject to sanctions, causing significant distress. Approximately €260 billion in Russian central bank assets were immobilized in G7 countries, the EU, and Australia, with a significant portion held in Europe. Additionally, about 5 million private Russian investors had their assets blocked in international financial institutions, amounting to $3.4 billion as of July last year.

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