Russia has faced harsh sanctions from the US and other Western countries. The US has announced that it now has plans to work with the International Monetary Fund (IMF) and the World Bank to impose further sanctions on Russia.
The US Treasury Secretary, Janet Yellen, has stated that the “special military operation” in Ukraine will majorly affect the global economy. She also said that US authorities were looking toward providing more aid to Ukraine.
Russia-Ukraine war will affect the global economy
Recent reports have said that the Russian military was withdrawing its troops from Kyiv and the surrounding areas. However, there is still growing tension about this military conflict, as there are no signs that it will end soon.
Earlier this week, the clash between Russian and Ukrainian soldiers hit a peak after videos and images circulated online about the execution of hundreds of Ukrainian civilians in Bucha. The Kremlin has since opposed these claims, saying that there needs to be an investigation of these images.
The US Treasury Secretary, Janet Yellen, has opposed this ongoing act of civilian deaths in Ukraine. She has said that the ongoing war in Ukraine would majorly affect the global financial system. Yellen has also strongly condemned the occurrences in Bucha.
“Russia’s actions, including the atrocities committed against innocent Ukrainians in Bucha, are reprehensible, represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions for the world,” Yellen said.
Yellen further added that the US worked with global financial institutions to respond to the crisis. The US, the IMF, the World Bank and other global institutions wanted to work together to impose more sanctions on Russia. Yellen said that Russia needed to be excluded from the global payment network as one of the strategies that could be used to pressure the country to stop the invasion of Ukraine.
Despite the sanctions being used to pressure Russia to avoid the sanctions, there has been growing concern over the effects that these sanctions would have on European countries. The sanctions are now a double-edged sword affecting European nations that are heavily reliant on Russia’s gas supplies.
If European nations completely sever their ties with Russia, it could affect their economies and cause further chaos. Recently, there has been a debate that the cost of living in some European countries is significantly high, and this situation could be made worse if there are sanctions on Russian gas products.
Effects of war on Russia’s economy
The Russian economy has also been affected by the ongoing crisis in Ukraine. During the first week of the war, the Russian ruble plummeted to all-time lows below the US dollar. However, the RUB has demonstrated a strong recovery, and it emerged as a top-performing token towards the end of March.
Part of the reason why the ruble has recovered is because of the drastic measures taken by the Bank of Russia to tame the rising inflation. The central bank increased the interest rate from 9.5% to 20%.
However, there is still a looming threat of inflation and a financial crisis in Russia. Officials in Russia are currently looking for ways to preserve the economy, with some reports saying that Russia could start using cryptocurrencies to protect its economy.
However, the crypto community has refuted claims that digital assets could be used to avoid sanctions. The CEO of Binance, Changpeng Zhao, said that cryptocurrency transactions were transparent and could not be used to avoid sanctions.
In a recent interview, Zhao said that “crypto is too traceable, the governments worldwide are increasingly very good at tracking crypto transactions. So crypto is not good for that.”
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