America has created a new problem for Russia. The Russian government has deposited a lot of money in American banks. However, on Monday, when Russia tried to use these money to pay more than $ 600 million to its sovereign bond-holders, the US stopped it. America wants to increase pressure on Russia through this and wants to reduce its foreign reserves kept in dollars.
On February 24, Russia invaded Ukraine (Russia-Ukraine War). After this, America announced many sanctions on Russia. Under this, foreign exchange reserves kept by the Central Bank of Russia in American banks and financial institutions have been frozen.
However, the US Treasury Department during this period allowed the Russian government to use these money to make coupon payments on dollar-denominated sovereign bonds, on a case-by-case basis.
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However, on Monday, when Russia tried to use these money to make the biggest payment ever, the US government decided to block Russia’s access to the confiscated foreign reserves. The US Treasury Department said the payment also included a principal payment of $552.4 million to be paid upon maturity of the bond.
In addition, a coupon payment of $84 million is also due on Monday on the ‘2042 Sovereign Dollar Bond’. The interest payment made to the bond holders is called a coupon payment.
According to a Treasury Department spokesman, the move is intended to force Russia to consider whether it wants to use its dollar reserves to pay off bond-holders or meet its other needs like war. . If Russia chooses the second option, it could face its biggest default ever.
“Russia has to choose between its diminishing dollar reserve, or the source of new revenue, or the default,” the Treasury Department said. JPMorgan Chase & Co used to process Russian government payments as a correspondent bank, but now the US Treasury has stopped it from doing so. Sources said Russia has a grace period of 30 days to make the payment. If he fails to make the payment within these 30 days, he will face a default.