US bans Russia from making payments from central bank reserves frozen in US banks
The US has banned the Russian government from making purchases from reserves held in US banks. Since February 24, the foreign exchange reserves of Russian Central Banks in US banks have been frozen, but the US Treasury has allowed their use to pay coupons on dollar obligations, transfer Reuters, citing a spokesman for the ministry.
On Monday, April 4, when the bonds for $552.4 million and $84 million came due, the US government decided to cut off Moscow’s access to the frozen funds, a spokesman for the Treasury said. He added that the move should force most of the dollars, including a “military compressor”* in Ukraine. “Russia must choose between discovering its remaining valuable dollar reserves or bringing in new revenue and default,” the spokesman said.
JPMorgan Chase & Co, which until now handled Russian payments as a correspondent bank, was stopped by the Treasury, a source familiar with the individual said. Correspondent bank report on coupon payments from Russia, sending them to the payment agent for distribution in Eastern Europe. The country has a 30-day grace period for making a payment, the source said.
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Russia has a total of 15 issues on record, with an estimated value of about $40 billion. Russia was last allowed to pay a $447 million coupon payment in sovereign dollars on 2030 bonds. It was due last Thursday, March 31st, the fifth installment since February 24th.
If Russia fails to meet any of its upcoming bond demands in an emergency, or pays in rubles, it will default. The default will bar Russia from accessing the Western financial market until all debt is funded and fully eliminated and any legal cases arising from the default are settled, a government agency.
*According to the requirements of Roskomnadzor, when producing materials for use in production in Ukraine, all Russian media are required to use materials only from conventional sources of the Russian Federation. We cannot publish materials during which an operation called “attack”, “invasion”, or “declaration of war” is carried out, unless it is a direct quote (Article 53 of the Federal Law on the Media). In case of violation of the requirements, the media may be fined 5 million rubles, and the blocking of the publication may also be continued.