UK imposes new sanctions, Russia raises borrowing key rate
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London has decided to implement more restrictive measures on Russia, in addition to the sanctions it has already imposed.
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The Russian Central Bank headquarters in Moscow, Russia. (Bloomberg)
The UK Treasury announced on Monday that it intends to implement further restrictive measures against Moscow amid the Ukrainian conflict, and to sanction the Central Bank of Russia.
"Following already announced sanctions measures aimed at imposing severe consequences on Russian President Vladimir Putin and the Russian economy, the Chancellor of the Exchequer, in coordination with the Governor of the Bank of England, today announces the UK Government’s intention to take further restrictive economic measures in response to the invasion of Ukraine by Russia by targeting the Central Bank of the Russian Federation (CBR)," the Treasuy said in a statement.
The country, which has already announced hawkish sanctions against Moscow, will "immediately take all necessary steps to bring into effect restrictions to prohibit any UK natural or legal persons from undertaking financial transactions" with the Russian central bank, the Russian National Wealth Fund, and the Ministry of Finance.
Read more: EU Commission to ban Russian Central Bank transactions, freeze assets
Interest up
Against the background of war, the Russian Central Bank (RCB) has increased the key rate - the interest rate at which banks can borrow when the host is short on reserves - to 20%, which constitutes an unprecedented, historical increase.
The decision was taken upon an emergency meeting between the Board of Directors on Monday.
"The Board of Directors of the Bank of Russia decided to raise the key rate from February 28, 2022, to 20% per annum," the bank stated.
The bank divulges that it will make further decisions regarding the key rate depending on risk assessment, looking into the external and internal conditions of the financial markets surrounding them.
Upon announcing the launch of the military operation against Ukraine, the ruble saw a historic 9% depreciation in its value against the dollar, to which the RCB responded and took measures.
The RCB announced that it will be intervening to regulate the situation, assuring that it has "clear action plans for any scenario."
"To stabilize the situation on the financial market, the Bank of Russia has decided to start interventions in the foreign exchange market," said the central bank in a statement.
The measures taken intend to provide "additional liquidity to the banking sector" in Russia, especially after sanctions against Russia are also expected to affect the economic situation.
"The Bank of Russia will ensure the maintenance of financial stability and continuity of the operation of financial institutions, using all necessary tools," the statement said.
