President Joe Biden-led administration has set up an initial package of sanctions against Russia that includes restricting US financial institutions from processing transactions for Russian central banks, as stated by three people familiar with the matter.
The measures, which are considered as an option to be only implemented if Russia invades Ukraine, aim to hurt the Russian economy by cutting the “correspondent” banking relationships between targeted Russian banks and US banks that enable international payments.
While, US authorities have stated that banking restrictions would be a part of a package of possible sanctions, the administration plans to cut correspondent banking ties- which underpin global money flows- has not previously been reported.
The United States has also ensured that it will wield its most powerful sanctioning against specific Russian individuals and companies by placing them on the Specially Designated Nationals (SDN) list, effectively kicking them out of the US banking system, banning their trade with Americans and freezing their US assets, as per sources.
Whereas the White House and Treasury Department have declined to comment.
The sources said the package could change up to the last minute, and it was not clear who targets would be. However, they believe top Russian financial institutions, including, VTB Bank, Sberbank, VEB, and Gazprombank, are possible targets.
As per the reports, much of the global trade is transacted in dollars.
It is unclear whether Russian banks would be added to the SDN list, but both types of sanctions could hit Russia hard.