US taking ‘all measures’ to stop Russia benefiting from IMF assets: Treasury official

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The United States is doing all it can to prevent Russia from benefiting from its holdings of International Monetary Fund reserve assets, a US Treasury official said on Friday, saying Moscow faced big, if not insurmountable hurdles to doing so.

Russia received $17 billion in IMF assets known as Special Drawing Rights in a new IMF allocation last year, but to spend it, would have to find a country willing to exchange the SDRs for underlying currencies in the form of an interest-bearing loan.

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The United States and its partners, which account for the large majority of available counterparts in the IMF’s SDR transactions system, will not undertake any such exchanges, the official said.

“The United States is committed to taking all measures to prevent Russia from benefitting from its holdings of IMF SDRs,” said the official, speaking on condition of anonymity.

“As a result of sanctions by the United States and our partners, the Russian regime would face significant, even insurmountable, hurdles to use its SDRs.”

Even if the Russian Central Bank acquired key currencies such as dollars, euros, yen or pounds, through an SDR transaction, those assets would be “effectively immobilized” due to sanctions imposed by the United States and key partners following Russia’s Feb. 24 invasion of Ukraine, the official added.

US Republican lawmakers this week told Treasury Secretary Janet Yellen that she must block Russia from exchanging the SDRs, warning that the allocation had undermined previous sanctions on Russia even before it invaded Ukraine.

All IMF members received SDRs - backed by dollars, euros, yen, sterling and yuan - in proportion to their shareholding in the Fund in the distribution aimed at helping poorer countries fight the COVID-19 pandemic.

The lawmakers also said that Yellen and US allies should plan for contingencies to block a bailout if an economically weakened Russia is forced to turn to the IMF for future loans.

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