Washington is reportedly considering a wide set of punitive measures against Russia in the event of a military conflict with Ukraine.
The sanctions would target Russian banks along with Moscow’s ability to convert rubles to foreign currencies, Bloomberg reported, citing people familiar with the discussions. They would also reportedly target the Russian sovereign wealth fund, make it harder for investors to buy Russian debt on the secondary market and potentially disconnect the country from the SWIFT banking network.
The Russian ruble is trading steady against the US dollar on Tuesday despite threats of US sanctions, targeting Russia’s financial system and potentially being cut off from SWIFT, if a military conflict with Ukraine reignites.
The ruble strengthened to 73.98 against the greenback, while the euro declined to 83.53 rubles.
Russian stock markets also shrugged off the latest threats from Washington as the benchmark MOEX Russia Index rose 0.97% to 3,846.85 at 11:13 GMT following a decline of 2.6% on Monday.
The threat from Washington comes as US President Joe Biden is set for talks with Russian President Vladimir Putin by video link on Tuesday.
Multiple reports pushed by Western media outlets over recent days allege that Russia is planning a military incursion into Ukraine. The speculation, which has been persistently fueled by the Ukrainian government, is based on information allegedly received from anonymous or unnamed sources.
Earlier this year, Russia announced it is preparing to depart from the international payment system SWIFT, Maria Zakharova, Russia’s Defense Ministry spokeswoman said, in an interview with RT.
“The possibility of being disconnected from SWIFT is still considered as hypothetical. Nevertheless, inter-minsistry work is underway to minimize the risks and economic damage if our country’s access to the usual international financial instruments and payment mechanisms is limited. The Financial Messaging System of the Bank of Russia is an example of such alternative instruments. At the moment, options for its pairing with foreign counterparts – European SEPA, Iranian SEPAM, Chinese CUP and CIPS, are being discussed,” she said.
Zakharova pointed out that cooperation between the Russian payment system “MIR” and foreign counterparts, in particular, the Chinese UnionPay, the Japanese JCB and the international Maestro are developing.
Andrei Krutskikh, Director of the Department of International Information Security of the Russian Foreign Ministry, said that the Russian side is ready to respond if it is disconnected from the international payment system SWIFT.
Russia has been attempting to push its Mir payment system since 2019, with Russian lawmakers backing the international use of a Russian alternative system for the global financial messaging network SWIFT designed by Moscow to eliminate the risk of Western sanctions.
Back then, Russia held talks with China, India, Iran and Turkey about joint use of Russia’s financial messaging system, said Anatoly Aksakov, who heads the Russian Banking Association and a financial committee with the lower house of parliament.
“As the system has proved to be viable and efficient, it draws interest from both Russian and foreign players, it is proposed to give any legal entities, Russian and foreign, the possibility to use it,” Aksakov said.
This is becoming increasingly likely, as the sanctions the US, and also the EU pushes on Russia and China are making the two countries move ever closer.