Frozen Russian assets should be used for Ukraine’s post-war reconstruction, the governor of Ukraine’s central bank has told the BBC.
Kyrylo Shevchenko called for an extensive list of additional sanctions, from cutting card payments to blocking Russia’s access to the IMF.
Every day that sanctions are postponed “costs the lives of civilians and children,” he said in an interview.
For security reasons, he answered questions sent by email.
Mr. Shevchenko, governor of the National Bank of Ukraine, said Russia should eventually be forced to pay for repairs to damage caused during the invasion.
“The need for money will be enormous,” he told the BBC. “It could be met through loans and grants from multinational organizations and direct help from other countries. However, much of the funding must be obtained in redress from the aggressor, including funds currently frozen in our allied countries.”
Much of Russia’s $630 billion in foreign exchange reserves is thought to be held outside the country, effectively frozen by sanctions in the US, EU and elsewhere.
This would make billions available for reconstruction – if Ukraine can access it after the war is over.
calls for a detailed list of additional sanctions
Mr Shevchenko hailed the financial sanctions already imposed by the international community but said the world should go much further. He called on governments, institutions and companies to impose an extensive list of other financial sanctions targeting every corner of Russia’s economy.
He called:
- Trading and financial data platforms Refinitiv and Bloomberg are terminating access for Russian and Belarusian customers.
- US and EU instruct their banks to sever correspondent relationships with Russian banks.
- The organization of central banks, the Bank for International Settlements, to the exclusion of the Central Bank of Russia.
- The International Monetary Fund, which excludes Russia and Belarus from its meetings, is blocking their access to assets issued by the IMF called Special Drawing Rights “as these funds can be used to finance military action against our country.”
- China’s UnionPay card payment system (similar to Mastercard and Visa) is ending service of payment cards issued by Russian banks.
- Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey and Vietnam want to block the Russian payment system Mir.
- International money transfer provider Western Union has stopped delivering cash to Russian and Belarusian banks.
“We are already seeing the effect [of sanctions] on the attacker’s financial system, but we’re still waiting for more to be done. I want to emphasize that every day that sanctions are delayed costs the lives of civilians and children,” Shevchenko said.
“This is the life of Ukrainians who chose the European path and are now defending not only their own country, but the entire value system that is at the core of Western civilization.”
Central bankers usually target inflation.
It is clear from the testimony of the Ukrainian version of Andrew Bailey that they are leaving no stone unturned in this war by targeting the Russian financial system.
Every pipeline of cash into the “aggressor” has been identified, even as Mr. Shevchenko’s team tries to keep money flowing in Ukraine’s financial system and to its millions of refugees, even setting his country’s monetary policy from a bunker.
The IMF, the Bank for International Settlements, Western Union, Chinese credit card payment systems, the use of the Russian payment system by former Soviet states are all the subject of Kiev’s lobbying to put unprecedented pressure on the Russian financial system.
Most importantly, this targeting of Russia’s central bank, agreed by the G7 nations, has disarmed its largest foreign exchange reserves and halved the value of the ruble.
I asked him if he was concerned that this would set a precedent for institutions that are normally accorded sovereign immunity. He pauses. “I can answer from the bottom of my heart. We see that the Central Bank of Russia supports a military invasion and is therefore also guilty and responsible for the deaths of civilians in Ukraine.”
Donations top $350 million (£280 million)
11 billion hryvnia ($350m, £280m) was deposited into the two special accounts set up by the National Bank of Ukraine to receive donations for the military and humanitarian causes, Shevchenko told the BBC.
The military account was established on February 24 to accept international and local donations in multiple currencies.
A similar humanitarian account was set up on March 1st.
oil embargo
Western countries have struggled with suspending purchases of Russian energy. While the money Moscow receives for oil and gas exports is a vital lifeline, European governments have decided they cannot live without vital Russian supplies, at least for now.
Mr Shevchenko said: “Today we can see that Russia is using its energy resource capacity to put economic pressure on Europe. Energy is also one of the leading narratives in Russian media. They use it to misinform the Russian public about the West’s unwillingness to take tougher action for fear of losing access to Russian oil and gas.
“We know how difficult this decision is for our western partners. We understand the cost of such a step. But we must work together to find and use all possible tools to stop the killing and suffering that Russia is increasingly causing in Ukraine.”
Keeping Ukraine running
Mr. Shevchenko also described some of the challenges of keeping the country’s financial system running during a war.
His staff work around the clock, he said, with many sheltering from bombings in underground bunkers.
But he said electronic payments and ATMs were still working and cash was being delivered everywhere except in active combat zones.
“I can proudly say that the Ukrainian banking system remains stable and liquid even under martial law.”
“This is an extremely difficult time for every Ukrainian – for the people and for the country,” he said. “The National Bank of Ukraine is doing everything in its power to support Ukraine, its defenders and the population affected by Russian aggression.”
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