Jakarta, CNBC Indonesia – Russia was cornered by Western countries due to the war carried out on Ukraine. Various sanctions were also given to the country led by Vladimir Putin. Starting from trade sanctions, finance, to individuals.
From the financial sector, at least seven Russian banks and institutions were excluded from the international banking information network known as SWIFT (Society for Worldwide Interbank Financial Telecommunication). platform social network for banks.
In addition to cutting SWIFT from Russia, the United States and its allies will also freeze the foreign exchange reserves of the Russian central bank placed abroad. Before the Russo-Ukrainian war began at the end of last February, Russia’s foreign exchange reserves stood at US$643 billion, about half of which was placed abroad.
The United States cs move made Russian President Vladimir Putin more aggressive in ‘throw away’ US dollars. The use of US dollars as payment transactions was reduced, and Putin even asked for purchases of natural gas and crude oil and other Russian products to be paid in rubles.
Russia’s central bank (Central Bank of Russia / CBR) also plans to further reduce the use of the US dollar and euro. On the other hand, transactions will use the ruble and currencies of countries that are considered friendly to Russia.
This is stated in the CBR Financial Stability Review which was released last May 31. Reuters reports, the document contains plans to apply negative interest rates to legal entities that have bank deposits in US dollars and euros.
With the application of negative interest rates, it means that entities that deposit US dollars and euros in Russian banks do not earn interest, but must pay interest to the bank.
“I think it needs to be done to stimulate Russian businesses to use the ruble and continue the de-dollarization process,” one of the Russian parliamentarians said in an interview with Frank Media, as quoted by Reuters. Reuters.
Deputy Governor of CBR, Ksenia Yudaeva also confirmed that negative interest rates would not be applied to individuals who have US dollar deposits.
Russia’s steps to reduce the use of US dollars have actually been carried out since 2014, when it was given sanctions for annexing the Crimea region, Ukraine. Since then Russia’s foreign exchange reserves in US dollars have been steadily decreasing. Russia says the United States uses the US dollar as a weapon to punish or impose sanctions on certain countries.
Launching Kitco, on January 1, 2022, data showed CBR slashed the portion of its foreign exchange reserves in US dollars to 10.9%, a decrease of almost half from the previous year of 21.2%.
Foreign exchange reserves in the form of yuan increased from 12.8% to 17.1%, and in euros from 29% increased to 33.9%.
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