(USNewsMag.com) – The US Treasury Department spokesperson told reporters earlier this week that steps were taken to prohibit Russia from making debt payments using American dollars held in US banks. The decision came as President Joe Biden’s administration looked for new ways to squeeze Russian President Vladimir Putin to try to force him to stop the war in Ukraine.
The United States has started blocking Russia from making debt payments using dollars held in US banks, a move designed to deplete its international currency reserves and potentially push Russia toward its first foreign currency debt default in a century.https://t.co/5oAfiuK7yC
— Economic Times (@EconomicTimes) April 5, 2022
Although the US government had imposed many sanctions on Russia, the Treasury Department was still allowing it to make its debt payments using American banks. The federal agency created an exemption to allow the practice to continue until May 25 in order to stabilize the global financial system. On April 4, two large payments came due: an $84-million coupon and $2-billion bond. Instead of using American dollars, Russia paid about three-quarters of the bond in rubles but still owes more than $500 million on the debt. The country now has a 30-day grace period before it has to pay the remainder.
Biden’s decision to restrict the country’s ability to pay its debt using American money could cause Putin to deplete the country’s international currency reserves and default on its payments.
The decision to restrict Russia’s access to the US banking system and dollars could create an unstable financial market. But it’s just one more strategy to try to end the war. Do you support the Biden administration’s decision?
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