Russia’s Central Bank says further Western sanctions targeting the Kremlin’s ability to make international payments could lead to the “death of its economy”.
Since Putin’s invasion of Ukraine in February 2022, Western countries have imposed a brutal package of sanctions on Russia.
Many of these have targeted the country’s banks and financial institutions in an attempt to disrupt the Kremlin’s ability to fund its war.
Western countries moved quickly to restrict Russia‘s ability to make international payments by removing several banks from SWIFT.
This is the global financial artery that allows the smooth and rapid transfer of money across borders.
The aim was to make it much harder for the Kremlin to receive payments for its valuable energy and agricultural exports.
Vladimir Chistyukhin, a First Deputy Chairman of the Bank of Russia, warned the Kremlin that problems with international payments posed an existential threat to the economy.
He said the issues “need to be resolved as quickly as possible” and that the Kremlin should explore all possibilities, including the use of crypto currencies.
“Because if there are no normal payments for products related to foreign economic activity, for our export- and import-dependent country, it’s death,” he added.
The West has sought to tighten restrictions on Russia‘s ability to make international payments.
Recently US President Joe Biden expanded the powers of the US Treasury, allowing it to cut off any banks around the world from dollar payments if they were deemed to be helping the Russian military-industrial complex.
Banks in Turkey and the United Arab Emirates, key hubs for parallel imports to Russia, began blocking payments.
Then, Chinese banks joined the financial blockade. By the end of early spring 80 percent of settlements between Russia and China were suspended.
This posed a major problem for the Kremlin, as China is the main buyer of Putin’s oil and the largest supplier of imported goods to Russian markets.
Putin had high hopes of agreeing a deal with President Xi Jinping to circumnavigate sanctions on his banks during his recent visit to Beijing.
Although they discussed the creation of an isolated network of Chinese banks that would conduct settlements with Russia, its scale turned out to be much smaller than what the Kremlin wanted – according to the Financial Times.