US closes loophole Preventing Russian from Using Its Banks

United States Treasury Department has revealed that it would end a waiver that had allowed US bondholders to accept payments, tightening sanctions imposed over the war in Ukraine.

Russia has already signalled plans to contest any declaration of default.

The country has almost $2 billion worth of payments that will be due up to the end of the year on its international bonds.

With the new rules only apply to people in the US, they will make it difficult for Russia to make payments elsewhere given the role of US banks in the global financial system.

The US had already barred Russia from using US banks to transfer payments.

In comments last week, US Treasury Secretary Janet Yellen warned the waiver for investors was likely to expire. She said the exemption had been intended to allow an “orderly transition”.

Analysts have said they do not expect major ramifications from the move outside of Russia, with IMF chief Kristalina Georgieva saying in March that exposure to the holdings was “not systemically relevant”.

Credit: BBC