Russia’s financial isolation is intensifying: authorities are preparing new restrictions

Russia plans to grant Vladimir Putin new powers — he will be able to unilaterally restrict or completely ban currency transactions.

This was reported by the Interfax agency, citing a draft law prepared by the Russian Ministry of Finance.

These are amendments to the law “On Currency Regulation and Currency Control.” If the amendments are adopted, the Russian dictator will have the right not only to set restrictions, but also to require special permits for currency transactions, introduce mandatory sales of foreign currency, and prohibit the opening of currency accounts in banks. All presidential decrees will be equated with acts of currency legislation, so their violation will be punishable as a violation of the law.

The tightening of control over the foreign exchange market comes against the backdrop of already existing restrictions. After the start of the full-scale invasion of Ukraine and a wave of Western sanctions, the Russian authorities introduced a number of measures: mandatory sale of foreign exchange earnings for businesses, restrictions on cash withdrawals, and a ban on transactions with “unfriendly” currencies. In particular, Russians can withdraw no more than $10,000 — and only from accounts opened before March 9, 2022. Russia has also lost access to about $300 billion in reserves frozen abroad, and most of its banks have been disconnected from the SWIFT system.

The new amendments actually open up the possibility of manual control of the foreign exchange market, which strengthens overall financial control and could deepen Russia’s economic isolation.

Recall that the most powerful businesses in Russia have found themselves in a zone of serious financial risks – state reserves and instruments to support them have almost been exhausted.

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