LONDON – The Bank for International Settlements, the umbrella body for central banks worldwide, said on Monday it would not be an avenue for any circumvention of powerful Western sanctions put on Russia over the weekend.
Western allies announced sweeping new sanctions against Moscow on Saturday, including Russia’s central bank in a bid to restrict its ability to deploy $640 billion of forex and gold reserves.
As part of its role, the Switzerland-based BIS can conduct currency and reserves transactions for its member central banks, which include Russia.
“The BIS will not be an avenue for sanctions to be circumvented,” spokeswoman Jill Forde said during a conference call with journalists following its first major report of the year. “The BIS will follow sanctions as applicable”.
The head of the BIS’s monetary and economic department, Claudio Borio, said the dramatic events in Ukraine, and the retribution for Russia, meant the global economy was now facing widespread uncertainty.
Rising energy and commodity prices will further push up global inflation, while such far-reaching sanctions have never been applied to a country so interconnected in the world economy as Russia.
“It is hard to tell where markets will go from here,” Borio said. “The situation has clearly changed”.
“Central banks’ challenges have become more complex,” he said, referring to how major central banks such as the U.S. Federal Reserve have been preparing for their first post-COVID pandemic interest rate hikes.
(Reporting by Marc Jones; editing by Philippa Fletcher)