ER Editor: Our gratitude to Robin Westenra for compiling this. We still insist this is a movie, however, and are in no way endorsing the war / sanctions scenario that is threatened / claimed in this piece. We are interested in the currency and trading aspect; the rest is ‘justification’.
Janet Yellen? She’s been gone a while (see here and here).
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BREAKING: Russia just banned all trading in the dollar and euro, across the Moscow exchange
ROBIN WESTENRA
It is not hard to see where this is going
The collapse of the dollar and the rise of BRICS currencies is happening faster than we even anticipated.
So now the MOEX has halted all transactions in dollars. This same thing will soon be announced by Saudi Arabia, which will halt the sale of oil in dollars. This will implode the dollar virtually overnight as countries around the world begin panic dumping the failed US currency.
The Moscow Exchange (MOEX) suspended trading in dollars and euros on Wednesday, the move having been prompted by a new sanctions package unveiled by the US Treasury earlier in the day.
The suspension affects foreign and precious metals trade as well as stock and money trading on Russia’s largest public trading markets, MOEX noted in a statement. Except for dollars and euros, all other financial instruments remain operational. The derivatives market has also been unaffected by the changes, with trade going on as usual, MOEX noted.
Russia’s Central Bank elaborated on the matter in a separate statement, explaining that “transactions in the US dollar and euro will continue on the over-the-counter market.” To establish exchange rates, the Bank of Russia will be using “bank records and information from digital over-the-counter trading platforms,” the regulator added.
Earlier on Wednesday, the US Treasury Department rolled out a new package of restrictions against Russia, targeting the country’s “foundational financial infrastructure.”Announcing the package, Treasury Secretary Janet Yellen claimed Russia has fully transitioned into a “war economy” and is now “deeply isolated” from the international financial system.
“Today’s actions strike at their remaining avenues for international materials and equipment, including their reliance on critical supplies from third countries,” Yellen asserted.
Apart from the MOEX, the sanctions package targeted its two subsidiaries, namely the National Clearing Center (NCC) and the National Settlement Depository (NSD).
The suspension of dollar and euro trade on the platform, which has been booming lately, comes into effect on Thursday. The MOEX reported registering all-time high private investor activity back in February, with a total of 4.1 million individuals conducting transactions on the platform. Last month, the total trade volumes across the platform’s markets measured at 126.7 trillion rubles ($1.4 trillion) compared to 94.2 trillion ($1 trillion) during the same period a year ago
More than two years into the war in Eastern Europe, it’s time to ask: What have Western sanctions against Russia actually accomplished?
Earlier this year, Russian President Vladimir Putin boasted about Russia’s economic resilience and ability to withstand international sanctions. The West’s attempts to cripple Moscow’s crude oil revenues and cut off its access to military technology are failing.
Putin recently remarked, “We have growth, and they have decline… They all have problems through the roof, not even comparable to our problems.”
Given the context above, the West is about to broaden the scope of secondary sanctions on Russia, as reported by the Financial Times. This move will target any financial institution transacting with sanctioned Russian entities, treating them as working directly with Moscow’s military-industrial base.
The measure will widen a White House executive order that in December gave the Treasury the authority to apply secondary sanctions on foreign financial institutions if they were found to have acted for, or on behalf of, any of about 1,200 entities deemed by the US government to be part of Russia’s defence sector.
After this week’s change, that number will rise to more than 4,500 and will encompass almost all Russian entities that have already been sanctioned, even if this was for reasons other than direct support of the war in Ukraine. They include banks such as Sberbank and VTB, the country’s largest lenders. -FT
“Secondary sanctions are intended to expand the US’s ability to pursue circumvention by actors who do not have any legal nexus with the US. It means the US can, in effect, enforce its sanctions on people who aren’t otherwise subject to US law,” said Emily Kilcrease, a trade and sanctions expert at the Center for a New American Security think-tank.
The US aims to disrupt trade flows between Chinese institutions and Russian firms by expanding the scope of secondary sanctions. The partnership between these two nations has grown closer since the invasion of Ukraine.
Kilcrease noted, “You could see this as strengthening the legal basis under which the US could apply sanctions to Chinese banks that have assisted the Russian war effort. The Treasury will hope they take notice. But at some point you may need to actually escalate and sanction one of them.”
Meanwhile, Russian commodities firms are ramping up their use of fiat-pegged digital currencies to execute cross-border transactions with Chinese counterparts. Conducting trade in stablecoins could be problematic in the West’s attempt to crush Moscow.
As explained weeks ago by US Deputy Secretary of State Kurt Campbell in a conversation with reporters:
“I think where we are primarily focused is on Chinese companies that have been involved in a systematic way in supporting Russia . . . we’ve also looked closely at financial institutions.”
In a separate report, Reuters says the US will announce “wider sanctions on the sale of semiconductor chips and other goods to Russia, with the goal of targeting third-party sellers in China.”
“We’re going to continue to drive up costs for the Russian war machine, and this week we will announce an impactful set of new sanctions and export control actions,” National Security Council spokesman John Kirby told reporters Tuesday.
The move to broaden secondary sanctions on Russia while targeting Chinese firms comes as Group of Seven leaders plan to meet at a summit in Italy this week. One major topic to be discussed is new ways to increase aid to Ukraine and further contain Russia.
From Hal Turner
RUMORS swirling on Moscow right now say Russia may have to “take-out” U.S. Stock Exchanges by placing them on the target list of “decision-making centers.” That would make New York City a primary target for Russian military strikes.
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