The new measure of the US Treasury regarding the Russian public debt is highly likely to lead to a technical default. We are talking about limiting the implementation of payments in dollars on the state debt of Russia from the accounts of Russian state structures in US banks.
Russian economist, director of the Higher School of Finance of the Russian University of Economics. Plekhanov Konstantin Ordov commented on the threats that the American financial system will face after this decision is made. His words are quoted by Lenta.ru.
According to the expert, this measure is another way to drive Russia into an economic dead end, to create more difficult conditions for the implementation of obligations to foreign investors. According to Reuters, the ban went into effect on April 4.
“The goal of freezing our gold and foreign exchange reserves in dollars and euros was completely transparent and understandable – to lead to a technical default. But for some reason, the achievement of this goal fell through, and we continued to service our public debt from foreign exchange earnings. The goal was as it was, and is, therefore, this decision is in the logic of the goal that was set for the American regulators”, Ordov explains.
This is the last measure indicating the inevitability of a technical default on the loan debt. At the same time, such a restriction will primarily affect investors who will not be able to withdraw their funds.
“Almost half of our public debt holders are Russian residents. The second half is not the US Federal Reserve System (FRS), but private companies, individuals, investment funds and other market participants. What is not clear is the behavior of the regulator and the American government, who want to punish them. It’s not very obvious what the logic is here. There is a feeling that they are trying to freeze their ears to spite some mother there”, says Ordov.
The expert added that the technical failure to fulfill the loan debt will become a very real scenario in the coming months if a compromise between the Russian Federation and the United States cannot be reached. This will lead to another destabilization of the financial market, which is obviously going through hard times.
Ordov is convinced that this state of affairs is likely to lead to a panic in the world market and exacerbate the likelihood of a crisis.
On April 4, US national security adviser Jake Sullivan said that the White House would increase economic pressure on Russia. Moreover, this will happen in cooperation with European countries.
Earlier, the Ministry of Finance of Russia announced the full fulfillment of obligations on payments on Eurobonds maturing in 2030, despite the sanctions.
In early March, the United States, EU countries, Great Britain and Japan introduced restrictive measures against the Central Bank of Russia. The regulator’s reserves in the national currencies of these countries were frozen.
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