disconnection from SWIFT and freezing of assets are painful

Head of the Bank of Russia, Elvyra Nabiullina, called the disconnection of Russian credit institutions from the SWIFT international payment system and the freezing of assets the most painful sanctions for the country’s financial system.

As Nabiullina told in the first RBC interview in almost two years since the beginning of the full-scale Russian invasion of Ukraine, the disconnection of Russia from SWIFT is still an unresolved problem for the Russian financial sector.

According to Nabiullina, the Bank of Russia was ready for part of the sanctions imposed by Western countries in response to the Russian invasion of Ukraine, as it faced restrictions after the annexation of Crimea in 2014. In particular, already then in Russia they began to create a national payment system in order to reduce the risks of disconnection from SWIFT. However, the problem was precisely the impossibility of international (cross-border) payments. “Yes, chains are being built, they are constantly changing, but this still remains a problem for many enterprises,” RBC quotes the head of the Russian Central Bank.

The freezing of reserves of the Russian Central Bank abroad became “a very negative signal for all central banks, because it is a violation of the basic principles of the protection of reserves,” Nabiullina believes. According to the head of the Central Bank, Russia managed to reduce the negative consequences of these sanctions with the help of a floating exchange rate and restrictions on the sale of currency, which were adopted in the spring of 2022.

“The blocking and freezing of assets of private individuals – millions of people who were not subject to sanctions, but found themselves with frozen assets – became a very painful topic,” added Nabiullina.

She did not rule out the tightening of anti-Russian sanctions and emphasized that we need to be ready for this, even if “there is a temptation to think that we have passed 2022 so well and now we are, as they say, knee-deep in the sea,” the head of the Bank of Russia said in an interview with RBC.

An earlier edition of Politico named Elvyra Nabiullina “destroyer” year “The aggressive monetary policy of Nabiullina, who has been the head of the Russian Central Bank for ten years, has repeatedly saved the ruble and kept the country’s economy afloat. She also managed to prevent the consequences of unprecedented Western sanctions designed to devastate the Kremlin’s coffers,” writes Politico.

Western countries are actively studying ways to confiscate frozen Russian assets in favor of Ukraine. As the Financial Times newspaper writes, “members of the Group of Seven and other states may confiscate Russia’s assets as a countermeasure to encourage Russia to end its aggression.”

It is noted that the intensification of negotiations is caused by the fact that in recent weeks the allocation of two packages of financial aid for Ukraine in the amount of more than 100 billion dollars failed: because the Republicans in the US Congress and the Prime Minister of Hungary, Viktor Orban, opposed the financing of Kyiv.

• In Western countries, about 300 billion dollars of reserves of the Central Bank of Russia are frozen.