Russia assesses impact of possible US seizure of assets

Russia’s financial stability will not be affected if the US seizes its frozen assets, Bank of Russia Governor Elvira Nabiullina told journalists on Friday.

The US and its allies have blocked around $300 billion in Russian central bank assets as part of Ukraine-related sanctions, most of which are being held in the EU. On Wednesday, US President Joe Biden signed a bill allowing the White House to seize some $6 billion in Russian state assets that are sitting in US banks.

“As for the possible confiscation of our gold and foreign exchange reserves, it will not have any impact on financial stability, as we have halted operations with them long ago, we do not use them,” Nabiullina said at a news conference.

The Bank of Russia has been diversifying its forex reserves for several years, and is currently conducting operations with reserves that are not affected by sanctions, she added. 

“This will help mitigate financial stability risks if they arise, but currently there are no such threats,” the head of the regulator stressed.

The White House has long insisted on confiscating the funds to aid Ukraine in its war effort against Russia. Meanwhile, EU lawmakers, as well as G7 finance chiefs, have raised deep concerns over the legal ramifications of any asset seizure. EU nations, which hold the lion’s share of frozen Russian funds, are concerned that expropriating them would trigger an outflow of investment and destabilize the euro.

Nabiullina previously warned that the seizure of profits from frozen Russian funds, as well as the confiscation of the funds themselves, would lower the attractiveness of the euro and the dollar as reserve currencies in international markets.

Moscow has repeatedly said the seizure of its assets would be “theft.” After the US House of Representatives approved the bill authorizing the confiscation of Russian money, Kremlin spokesman Dmitry Peskov warned that Moscow would immediately retaliate to the move. 

Russian Deputy Foreign Minister Sergey Ryabkov has said Moscow could downgrade diplomatic relations with Washington if the assets are seized.