President Joe Biden declared on Tuesday that Russia had launched an “invasion” of Ukraine. He announced broad sanctions against the significant Russian bank VEB, its military bank, its sovereign debt, and three individuals.
The US is responding to President Vladimir Putin’s decision to recognize the so-called Donetsk and Luhansk People’s Republics (DNR and LNR) as “independent” states and send troops to these areas. By sanctioning two major Russian state-owned financial institutions, adding new restrictions to Russian sovereign debt, and sanctioning five Kremlin-connected elites.
American financial institutions will be barred from processing transactions for VEB and Russia’s military bank, PSB, due to the bank sanctions. It effectively excludes banks from transactions involving US dollars, the world’s reserve currency, CNBC reported.
The Treasury sanctioned the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), Promsvyazbank Public Joint Stock Company (PSB), and 42 of their subsidiaries to limit Russia’s ability to finance aggression against its neighbors.
Restrictions to Russian sovereign debt
Sanctions imposed by the United States on Russia’s sovereign debt have alerted global investors that the securities could fall even further, despite the steep declines experienced as the Ukraine crisis escalated.
While President Joe Biden’s measures fell short of more dramatic action that could significantly limit the country’s access to funding, Tuesday’s action served as a warning shot. Investors are wary of further moves that could affect a broader range of Russian banks or even restrict the country’s capacity to switch rubles into foreign currencies.
In response to Russian President Vladimir Putin’s order to send troops into eastern Ukraine, the United Kingdom imposed sanctions on three politically connected Russian businessmen and five Russian banks.
In retaliation for Russia’s actions in Ukraine, the sanctions seek to freeze Gennady Timchenko and Igor and Boris Rotenbergassets and limit their travel. They are wealthy Russian businessmen with close ties to Putin.