Most Russians haven’t been affected by Western sanctions, however there’s one factor the U.S. Treasury can do to place actual political strain on Vladimir Putin—instantly cease circulating and honoring $100 payments in Russia.
Rather than investing in a retirement fund, bizarre and rich Russians alike defend their life financial savings by changing their rubles to {dollars} and stashing them at dwelling. Russian ruble volatility and U.S. greenback safety and stability have made American foreign money a most popular financial savings mechanism. For years, Russians’ invoice of desire has been the $100. As of 2019, greater than 661,500 kilos of $100 payments had been in Russia—a lot of them stashed in lumpy mattresses and home-sewn cash belts. That’s $31.5 billion.
Messing with the $100 be aware in any respect causes panic in Russia. Millions of Russians had been alarmed in 1996 when Washington redesigned the $100 invoice to be much less simply counterfeited. Russians, used to dramatic foreign money reforms, frightened their saved {dollars} had been immediately nugatory, with fewer individuals accepting the dated foreign money. In these days Russians held extra U.S. {dollars} than another international foreign money, and 80% of these dollars had been $100 payments. Though the U.S. Treasury didn’t formally recall the prevailing $100 notes, many Russian business bankers warned they might possible reject the previous model or require a charge to alter them out.
So whereas sanctions have didn’t dissuade Mr. Putin’s army goals, partially as a result of they do little to have an effect on the well-being of most Russians, quickly phasing out the $100 may trigger actual home backlash towards the battle in Ukraine. In the present Russian banking atmosphere, there wouldn’t be a simple solution to convert these discontinued payments to different foreign money. Russians’ financial savings can be diminished to paper.
It can be unattainable then to cover the impact of Mr. Putin’s battle from his base. President Biden ought to say that the $100 invoice is terminated due to the Russian chief’s battle in Ukraine and the violence he has inflicted on civilians. Mr. Putin can obscure and spin this all he needs, however Russians will nonetheless know that his actions led to their financial savings being worn out.
It may even be a good suggestion to sundown the $100 world-wide. Almost 80% of U.S. $100 payments reside abroad and loads of that fuels unhealthy actors. Easy-to-transport money is a key to world corruption and crime, as former Treasury Secretary Larry Summers has argued. Large Western payments just like the $100 are what terrorists and drug traffickers use to conduct a lot of their commerce. This is how the still-circulating €500 payments received their moniker “bin Ladens.” Getting rid of big-denomination foreign money—the way in which the U.S. stopped issuing $500, $1,000 and $5,000 payments in 1969—would additionally damage autocratic regimes like North Korea by depriving them of a simple solution to launder ill-gotten positive aspects.
In the U.S., analysis means that eliminating the $100 invoice may assist curtail tax evasion and business theft in addition to that by workers.
Even opening up a coverage debate about eliminating the $100 invoice would stir issues up from Russia to Iran to Venezuela. This alone may do extra to upset the political establishment for Mr. Putin than many sanctions.
It’s price attempting any nonviolent measure that would dissuade Mr. Putin from his imperialistic goals and save lives in Ukraine. Let’s eliminate the $100 invoice.
Mr. Kounalakis is a visiting fellow on the Hoover Institution, a former Moscow correspondent for NBC Radio and creator of “Freedom isn’t Free: The Price of World Order.”
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Appeared within the May 10, 2022, print version.
Source: www.wsj.com”