US and Allies Freeze $300 Billion of Russian Assets, Threatening Escalation

 After President Vladimir Putin sent troops into Ukraine in 2022, the United States and its allies prohibited transactions with Russia's central bank and finance ministry, blocking around $300 billion of sovereign Russian assets in the West. The United States has proposed that working groups from the Group of Seven (G7) major industrialized nations explore ways to seize that money, according to the Financial Times. Like other central banks, the Russian central bank placed some of its gold and foreign exchange reserves in liquid assets such as major currencies, gold, and government bonds, with about half of those reserves held in the West.

According to @FT, G7 are discussing seizure of $300 billion in Russian Central Bank assets by February 24, 2nd anniversary of #Russia's major assault on #Ukraine.

Good. pic.twitter.com/vVcAKnOuJm

— Steven Pifer (@steven_pifer) December 28, 2023

The central bank confirmed that about $300 billion worth of assets had been frozen in the West at the time. Total Russian foreign currency and gold reserves totaled $612 billion. The Russian central bank held around $207 billion in euro assets, $67 billion in U.S. dollar assets, and $37 billion in British pound assets at the beginning of 2022. It also had holdings comprising $36 billion of Japanese yen, $19 billion in Canadian dollars, $6 billion in Australian dollars, and $1.8 billion in Singapore dollars. Its Swiss franc holdings were about $1 billion.

The bank's biggest bond holdings were in the sovereign bonds of China, Germany, France, Britain, Austria, and Canada. Russia's gold reserves were held in Russia, and investments in yuan are held in China. Russian officials have repeatedly warned that the state confiscation of assets goes against all the principles of free markets. Some have suggested that if Russian assets are confiscated, then foreign investors' assets stuck in special so-called type C accounts in Russia could face the same fate.

The amount of money in these accounts is comparable to the $300 billion of Russian reserves frozen. Kremlin spokesman Dmitry Peskov told reporters that Russia would challenge any confiscation in the courts, stating, "If something is confiscated from us, we will look at what we will confiscate. We will do this immediately."