Bank of Russia Governor Elvira Nabiullina confirmed that the bank is building reserves in assets less susceptible to US sanctions. The governor revealed that Russia is building a “safe cushion” in these assets while continuing to build new reserves in assets not subject to US sanctions.
Russia has created bank savings from non-sanctioned assets
Bank of Russia Governor Elvira Nabiullina said that the Central Bank of Russia has succeeded in creating so-called safety cushions for the Russian economy based on assets that are less likely to be blocked by US sanctions. According to a report by Russian news agency TASS, Nabiullina said that the bank has focused on building up this type of resources because the country was affected by a broad sanctions package due to its involvement in the Russian-Ukrainian conflict.
Nabiulina said that the presence of these reserves allows the country to “relax” and explained that the country will continue to stockpile such assets. Sheexplained:
we are in the process of forming reserves based on what assets cannot be used for sanctions pressure, how foreign trade is changing, etc.
However, Nabiulina does not specify the nature or type of these “non-sanctionable” assets.
U.S. sanctions against Russia
The broad sanctions faced by the Russian Federation have changed the composition of its international trading partners, leaning away from Western imports and toward better relations with countries such as Iran and India. In fact, Russia now has trade agreements with both countries.
Sanctions applied to the Russian Federation include freezing foreign gold and foreign exchange reserves and prohibiting countries and companies from doing business with Russian banks and certain Russian companies and individuals. The first of these sanctions was recently extended by U.S. President Joe Biden, who reiterated that the country’s activities still pose an “extraordinary and extraordinary threat” to U.S. security
However, Nabiullina indicated that work is underway to recover these frozen assets, which consist of US dollars and euros.
The so-called “weaponization” of dollar-centric sanctions has come into the limelight with the rise of the international de-dollarization movement, which seeks to create an alternative to the US currency.
U.S. Treasury Secretary Janet Yellen recently noted the impact of overuse of sanctions on the status of the U.S. dollar, stating: “Any financial sanctions related to the role of the dollar could, over time, undermine dollar hegemony.”