By FintechNews staff
U.S. President Joe Biden hit Russia with some of the broadest and toughest financial penalties that the world’s biggest economy can muster on Thursday, hours after President Vladimir Putin launched his military’s invasion of Ukraine.
Thursday’s sanctions target big Russian banks holding nearly 80% of all the country’s banking assets, the Treasury Department said.
The targeted banks normally do tens of billions of dollars in business in dollars daily. The U.S. is now cutting them off from the U.S. financial system and U.S. dollar.
The sanctions target not only Russia’s largest state-owned banks but also a number of Russian political and business elites. They also penalize companies in virtually every major sector of the economy, including mining and minerals as well as telecommunications and railways.
The Biden administration and allies and partners are also cutting off Russia’s access to key components like semiconductors, which are crucial to its emerging and high-tech industries.
Russia’s sanctioned banks said Friday (Feb. 25) that they have enough liquidity to meet client demand and are working to make it through the crisis.
According to Reuters, the banks issued a joint statement, noting there were no restrictions on their ATMs or branches.
Russian lender VTB said all cards, Mastercard and Visa included, would still be functional within Russia and that it would not limit its currency exchange operations.
The sanctions stopped short of barring Russia from the SWIFT payments system — a measure proposed by political leaders in the U.K. and the U.S. as well as Ukraine’s president. U.S. President Biden said such a step remains a possibility.
“It is always an option, but right now that’s not the position that the rest of Europe wishes to take,” he said.
If Russia were removed from SWIFT, the country would be cut off from most international financial transactions, including its largest profit center, oil and gas production, which accounts for more than 40% of the country’s revenue.
Putin told state media on Thursday that Russia was prepared for new sanctions and restrictions.
