Britain said on Monday it was taking further measures against Russia in concert with the United States and European Union, effectively cutting off Moscow’s major financial institutions from Western financial markets.
It banned British entities from undertaking transactions with the Russian central bank, finance ministry or wealth fund and said Russian companies will be unable to issue transferable securities and money market instruments in the United Kingdom.
Britain will have “a power to prevent designated banks from accessing Sterling and clearing payments through the UK”, the government said.
In a joint statement before London markets opened, British finance minister Rishi Sunak and Bank of England Governor Andrew Bailey said they were determined to impose “the highest costs” on Russia for its invasion of Ukraine.
London is by far the biggest centre for global foreign exchange, accounting for more than 43% of the total turnover, according to the Bank for International Settlement. The dollar is the most traded currency, followed by the euro, yen and British pound.
Western allies took action at the weekend to banish big Russian banks from the main global payments system SWIFT and announced other measures to limit Moscow’s use of a $630 billion war chest to undermine increasingly harsh sanctions.
In response, Russia’s central bank announced a slew of measures to support domestic markets. It said it would resume buying gold on the domestic market, launch a repurchase auction with no limits and ease restrictions on banks’ open foreign currency positions.
It also increased the range of securities that can be used as collateral to get loans and ordered market players to reject foreign clients’ bids to sell Russian securities.
CUT OUT OF LONDON
“We are announcing this action in rapid coordination with our U.S. and European allies,” Sunak said.
The measures “demonstrate our steadfast resolve in imposing the highest costs on Russia and to cut her off from the international financial system so long as this conflict persists,” he added.
Moscow calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.
Britain has already targeted Russian banks and members of President Vladimir Putin’s closest circle, imposed a ban on Russia selling debt in London’s markets and limited deposits by its citizens.
“The UK Government will immediately take all necessary steps to bring into effect restrictions to prohibit any UK natural or legal persons from undertaking financial transactions involving the CBR, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation,” the government said.
New sanctions also include further restrictions against Russian financial institutions and a set of measures to strengthen trade restrictions against Russia. More designations will be announced this week.
“The Bank of England continues to take any and all actions needed to support the Government’ response to the Russian invasion of Ukraine,” Bailey said.
Putin put Russia’s nuclear deterrent on high alert on Sunday in the face of a barrage of Western-led reprisals for his invasion of Ukraine, which said it had repelled Russian ground forces’ attempts to capture urban centres.
(Reporting by Guy Faulconbridge and William James; Editing by Kate Holton and Catherine Evans)
