Intereconomics, 2023
The paper discusses Russia’s accumulation of foreign assets, referred to as “shadow reserves,” which have been built up despite sanctions. Favorable external dynamics have allowed Russia to accumulate substantial assets abroad, which need to be kept out of reach of the regime. The authors suggest that central banks and supervisory authorities should be tasked with identifying Russian foreign assets to ensure that these funds cannot be used to widen Russia’s monetary and fiscal policy space.
To enhance the effectiveness of sanctions, the authors propose several measures:
Addressing loopholes in the sanctions regime, including, possibly, through the strategic and limited use of secondary sanctions.
Tasking central banks and supervisory authorities with the identification of Russian foreign assets to ensure that funds cannot be used to widen Russia’s monetary and fiscal policy space.
Limiting channels for energy-related transactions to improve transparency.
Strengthening documentation requirements for financial institutions within the price cap regime to allow for more effective implementation and enforcement.
Punishing sanctions violators through their reliance on the international financial system.
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