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How a G-7 ban on Russian gold would work

Russia appears to have defaulted on its foreign debt for the first time since the Bolshevik revolution of 1917, and the United States and its allies are targeting the former Soviet Union’s second-largest energy exporter after energy – gold. On Tuesday, the Group of Seven nations agreed to ban imports of Russian gold in the latest round of sanctions over Russian President Vladimir Putin’s invasion of Ukraine. Related video above: Biden says US will stay with Ukraine, sending $ 800 million in aid The US says Russia used gold to support its currency as a way to circumvent the effects of sanctions. One way to do this is to exchange gold for a more liquid currency that is not subject to current sanctions. Some experts say that because only a few countries enforce the gold ban, the move is largely symbolic, while others, including those in the Biden government, say the ban on Russian gold imports will be aimed at its ability to interact with the global financial system. . How would the ban on Russian gold G-7 work: How much gold does Russia have? Secretary of State Anthony Blinken told CNN on Sunday that since gold is Russia’s second most lucrative export after energy and almost 90% of its revenue comes from the G-7 countries, “this cut, denial of access At about $ 19 billion a year, that’s important. ” “to get what it takes to modernize its defense sector, to modernize its technology, to modernize its energy exploration,” Blinken said. Russia began increasing its gold purchases in 2014, following US sanctions on Russia over Putin’s invasion of Crimea. The country now has $ 100 billion to $ 140 billion in gold reserves, which is about 20 percent of Russia’s central bank, according to US officials. How would a gold ban work? While Russia will still be able to sell gold to countries outside the Group of Seven, it will “affect Russia’s ability to earn export earnings,” says Chris Weafer, a Russian economics analyst at Macro. Consulting. “It is this high level of export earnings that has sustained the country and the economy since the sanctions were imposed after February 24,” Weafer said. In practice, it could lead to civil or criminal sanctions on people from countries that have agreed to a gold ban from Russia. Swiss customs officials said on Friday they were monitoring about three tonnes of Russian gold – worth more than $ 202 million – entering Switzerland from the UK last month as they monitor possible breaches of economic sanctions against Russia. What other measures have been taken for the gold trade? inventories. This came after calls from members of Congress to reduce the gold trade in Russia. The Treasury Department has issued instructions that U.S. individuals, including gold traders, distributors, wholesalers, buyers, and financial institutions, are generally prohibited from buying, selling, or facilitating gold-related transactions involving Russia. various sanctioned parties. How will this be done? Punish Russia? Like the thousands of sanctions imposed on Russia by various means, the ban on gold imports is intended to isolate Russia financially, to starve its financial arm and to prevent money laundering. The British Prime Minister Boris Johnson said at the G-7 meetings in Elmau, Germany that the ban “will directly hit the Russian oligarchs and will hit the heart of Putin’s war machine”. “Putin is wasting his meager resources in this pointless and barbaric war. He is financing his ego at the expense of both the Ukrainian and Russian people,” Johnson said. A White House official told reporters that the ban was another way to block roads between the Russian economy and the wider global financial system.

Russia seems to be default for its foreign debt for the first time since the Bolshevik revolution of 1917, and the US and its allies are targeting the former Soviet Union ‘s second largest energy exporter after energy – gold.

On Tuesday, the Group of Seven agreed to ban imports of Russian gold in the latest round of sanctions over Russian President Vladimir Putin’s invasion of Ukraine.

Related video above: Biden says US will stay with Ukraine, sending $ 800 million in aid

The United States says Russia has used gold to support its currency as a way to circumvent the impact of sanctions. One way to do this is to exchange gold for a more liquid currency that is not subject to current sanctions.

Some experts say that because only a few countries enforce the gold ban, the move is largely symbolic, while others, including those in the Biden government, say the ban on Russian gold imports will target its ability to interact with global financial system.

How would a Russian G-7 gold ban work:

How much gold does Russia have?

Secretary of State Antony Blinken told CNN on Sunday that since gold is Russia’s second most lucrative export after energy and almost 90% of its revenue comes from the G-7 countries, “cutting it off by denying access to revenue of about $ 19 billion a year. this is important”.

“It can’t get what it needs to modernize its defense, to modernize its technology, to modernize its energy exploration,” Blinken said.

Russia began increasing its gold purchases in 2014, following US sanctions on Russia over Putin’s invasion of Crimea. The country now has $ 100 billion to $ 140 billion in gold reserves, which is about 20 percent of Russia’s central bank, according to US officials.

How would a gold ban work?

While Russia will still be able to sell gold to countries outside the Group of Seven, it will “affect Russia’s ability to earn export earnings,” says Chris Weafer, a Russian economics analyst at consulting firm Macro. -Advisory.

“It is this high level of export earnings that has sustained the country and the economy since the sanctions were imposed after February 24,” Weafer said.

In practice, it could lead to civil or criminal sanctions on people from countries that have agreed to a gold ban from Russia.

Swiss customs officials said on Friday they were monitoring about three tonnes of Russian gold – worth more than $ 202 million – entering Switzerland from the UK last month as they monitor possible breaches of economic sanctions against Russia.

What other measures have been taken for the gold trade?

In March, the United States and its allies moved to block gold-containing financial transactions with Russia’s central bank to further limit the country’s ability to use its international reserves. This came after calls from members of Congress to limit the gold trade in Russia.

The Treasury Department has issued instructions that U.S. individuals, including gold traders, distributors, wholesalers, buyers, and financial institutions, are generally prohibited from buying, selling, or facilitating gold-related transactions with Russia and its affiliates. parties to which sanctions have been imposed.

How will this move punish Russia?

Like the thousands of sanctions imposed on Russia by various means, the ban on gold imports is intended to isolate Russia financially, to starve its financial arm and to prevent money laundering.

The British Prime Minister Boris Johnson said at the G-7 meetings in Elmau, Germany that the ban “will directly hit the Russian oligarchs and will hit the heart of Putin’s war machine”.

“Putin is wasting his meager resources in this pointless and barbaric war. He is financing his ego at the expense of both the Ukrainian and Russian people,” Johnson said.

A White House official told reporters that the ban was another way to block roads between the Russian economy and the wider global financial system.

How a G-7 ban on Russian gold would work Source link How a G-7 ban on Russian gold would work

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