Russia unveils anti-sanctions shield

Possible western sanctions targeting the Russian economy could lead to a spike in market volatility, but the country will be able to withstand restrictions thanks to its abundant reserves, Finance Minister Anton Siluanov said on Wednesday.

According to Siluanov, sanctions against Russian banks would be “unpleasant” but the government will make sure that all deposits with banks and all transactions, including in foreign currencies, are secured.

“Thank god we have enough forex liquidity and enough forex reserves,” Siluanov told reporters, adding, “They say we have a financial shield in the form of gold and forex reserves, budget surplus and [budget] rule, low debt.”

The minister noted that if the new sanctions target Russian energy companies, Russia would be ready to re-route its supplies to other markets.

The statements come as US and European officials are finalizing an extensive package of anti-Russia penalties. Western leaders have been claiming for months that Russia could be planning an attack on its neighbor Ukraine, an accusation that Moscow has repeatedly denied. Washington and its allies have said they could impose massive economic sanctions on Russia if it does invade Ukraine, and were reportedly considering cutting off the Russian banking system from the SWIFT international payment mechanism.

Siluanov said Russia will be able to switch to other financial systems if it is cut off from SWIFT. He added that possible restrictions on buying Russian debt would be “unpleasant but not fatal” for Russia, which had nearly $635 billion in gold and forex reserves as of early February.

The US and EU have previously placed sanctions on Russian banks and companies over Ukraine. In the past seven years, the Russian government and central bank have reduced the country’s exposure to the US dollar, shifted assets out of the US, and sold a smaller share of its debt to foreigners. Russia has been reshaping its international holdings in favor of other currencies and gold. International rating agencies have previously said that Russia’s financial reserves will allow the country to cope with the negative effects of sanctions.

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