Russia's Central Bank Chief Gears Up For Additional Sanctions Amid Economic Restructuring

The Governor of the Bank of Russia, Elvira Nabiullina, is preparing for heightened sanctions targeting the country’s economy amid swift restructuring efforts.

What Happened: Nabiullina on Monday stated that Russia’s economy is restructuring “quite quickly” as businesses adapt to the sanctions imposed due to the Ukrainian invasion, reported Bloomberg. Despite having weathered the initial storm, she warns of the need to brace for increased sanctions pressure.

The Bank of Russia Governor acknowledged the challenges faced in cross-border payments and the development of long-term financing. Nevertheless, she expressed optimism regarding the sustainability of the financial sector.

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On Friday, the U.S. Treasury announced its decision to sanction banks involved in deals aiding Russia’s procurement of war machinery equipment. This is irrespective of whether the banks are aware of their involvement. A 12th package of sanctions against Russia was supported by the European Union on Dec. 15.

Why It Matters: This development follows President Putin’s approval of the Digital Ruble Bill in July 2023, marking a shift in Russia’s financial landscape amid Western sanctions. The Bank of Russia, which had been exploring the idea of a central bank digital currency (CBDC) since 2020, began piloting the digital ruble in February 2022.

The heightened sanctions also come at a time when international banks, such as UBS Group AG UBS, which took over Credit Suisse Group in June 2023, are under increased scrutiny by the U.S. Department of Justice for potential evasion of Russian sanctions.

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