Payments

Putin gives Russian banks go ahead to suspend foreign currency operations amid sanctions

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August 9, 2022

President Vladimir Putin of Russia recently gave Russian banks approval to suspend operations in foreign currencies, due to sanctions. Since the Russian invasion of Ukraine in February, some sanctions have frozen foreign currency funds for Russian banks, according to a report by Reuters.

This is part of an effort by the Russian government to reduce usage of currencies from "unfriendly" countries that have placed sanctions against Russia. Putin said these measures will be in place until the sanctions are lifted.

Since the invasion of Ukraine, sanctions have cut many Russian banks from the SWIFT global payments system. In addition, Apple and Google cut Russia from their digital payments system, and Russians cannot use Mastercard or Visa abroad.

Russian banks in turn have little options for investing foreign currencies due to both capital controls in Russia and the risk of the funds being frozen abroad.