When Russia threatened world peace and invaded Ukraine, the United States and its allies declared a financial war on Russia. These reactions came in the form of sanctions, which are non-violent restrictions that may influence or penalize the actions of a particular country.
The United States, European Commission, France, Germany, Italy, the United Kingdom, and Canada removed Russian banks from SWIFT. SWIFT is a system used internationally by banks for cross-border payments. Additionally, those countries have frozen Russian foreign reserves in their jurisdictions, a reported amount of $630 billion.
The United States in particular has increased its sanctions regarding financial transactions with Russia. They have restricted U.S. based purchases of Russian bonds, and banned Russia’s largest bank (Sberbank) from most transactions involving U.S. dollars. The United States also banned technology exports to Russia and Belarus that would aid them in the conflict in Ukraine, and banned all imports of gas and oil from Russia. Furthermore, many U.S. companies have halted all operations in Russia, including Microsoft, Disney, and Apple.
The sanctions imposed by the United States are especially important, as the U.S. dollar is used in 50% of all international trade, and about half of all global bonds and loans must be paid in U.S. dollars. If sanctions continue, projections estimate Russia’s economy will contract up to 15% by 2022. But Russia is deeply integrated into the global market, meaning that these sanctions won’t just penalize Russia’s economy, but will have an impact across the world.