Feds: Banks will no longer be allowed to resell loans that originated in Russia September 26, 2021 September 26, 2021 admin

The Federal Reserve says it will no more allow banks to use their own funds to sell mortgages in Russia. 

“The Fed has decided to withdraw all funding to banks with assets in the former Soviet Union, including Ukraine,” the Fed said in a statement on Monday. 

The move follows Russia’s move to seize a $230 billion U.S. Treasury bond as collateral to avoid paying U.N. sanctions. 

US officials said Monday they expected the seizure of the bond to be followed by a full-scale economic shutdown that would hurt the economies of Ukraine and Georgia.

“While this is not an immediate threat, we do not expect it to be one for many years,” the Federal Reserve said.

 “If the Russian economy were to fall into a deep recession, the effects could be felt in the region and beyond,” the statement added. 

Russian Prime Minister Dmitry Medvedev on Monday ordered the suspension of the country’s $230bn debt to the U.K., the European Union and the International Monetary Fund. 

Russia said Monday it would use the bonds to help finance infrastructure projects in Georgia, which will become the second largest oil producer in the world. 

Ukraine, whose economy is suffering from Western sanctions imposed over its role in the conflict in eastern Ukraine, announced plans to extend a $40 billion loan guarantee to help revive its struggling economy. 

But the Kremlin said Monday that it will not extend the loan as it would be a breach of its commitments to Ukraine’s lenders.

Russia has also imposed a levy on the price of oil that could raise prices by as much as 60 percent, threatening to further strain its economy.

The sanctions imposed by the Obama administration on Russia last year have led to a trade war between the West and Russia, which has retaliated by seizing the Ukrainian and Russian markets. 

Reuters/ABC News