Daily Column – 28th February 2022

During the invasion of Ukraine, it became clear that modern warfare isn’t just drone attacks and cyber attacks. It also includes asset freezes, export controls, and sanctions on billionaires. This is because modern warfare isn’t just about drone attacks. High finance has become a major weapon in the West’s fight with Russia.

Over the weekend, Western leaders used the financial equivalent of a bazooka, announcing new economic sanctions against Russia. These kinds of sanctions have only been used against countries like Cuba, Iran, and Afghanistan before, and now Russia is getting them. They have…

Western governments put aside their fears and proposed that some Russian lenders be banned from SWIFT, the global messaging service that helps people make cross-border transactions. It’s a move that could cause a lot of chaos in the world’s financial markets.

An elite task force is being set up to go after the cars, homes, and yachts of wealthy Russians, in the hope that they will pressure Vladimir Putin to back down. Two Russian billionaires called for peace yesterday, and now more have done the same thing.

Central bank freeze: Western leaders said they’d “paralyse” the assets of the Russian central bank, which has never happened to a central bank from the G20 group before.

If you’ve heard that Russia could be booted from the SWIFT network as a “nuclear option,” you should look into the central bank freeze. It could be far more dangerous than that.

Why? Because: When we talked last week, we said that Russia had been stocking up on foreign reserves, which can be used to keep its currency stable in the event of sanctions. It would be bad for the Russian economy if the West blocked Putin from getting the reserves that are held outside of Russia. A plummeting ruble, spiralling inflation, and a run on the banks are all possible consequences. Even yesterday, Russians lined up at ATMs to get money before the ruble could fall.

Russia has a lot of things that it can do. Not very much. It could ask China for help, since 14 percent of its money is held there, which is a good friend of the United States For this reason, China might not be willing to help. China’s financial support for Russia is already weak.

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