Under the plans, British people and businesses will be banned from making transactions with the Russian central bank, its finance ministry and its wealth fund.
The UK’s Chancellor of the Exchequer, Rishi Sunak, alongside the Bank of England on Monday announced the UK government’s plans to impose further economic sanctions in response to the invasion of Ukraine by Russia by targeting the country’s Central Bank of the Russian Federation (CBR).
The move, which the UK Treasury department said is in concert with the US and the European Union (EU), is aimed at preventing the CBR from deploying its foreign reserves in ways that undermine the impact of sanctions imposed by the west, and to "undercut" its ability to engage in foreign exchange transactions to support the Russian currency Rouble.
Under the plans, British people and businesses will be banned from making transactions with the Russian central bank, its finance ministry and its wealth fund.
“These measures demonstrate our determination to apply severe economic sanctions in response to Russia’s invasion of Ukraine,” Sunak said.
“We are announcing this action in rapid coordination with our US and European allies to move in lock step once more with our international partners, to demonstrate our steadfast resolve in imposing the highest costs on Russia and to cut her off from the international financial system so long as this conflict persists,” the Indian-origin finance minister said.
The UK government said it will immediately take all necessary steps to bring into effect restrictions to prohibit any UK natural or legal persons from undertaking financial transactions involving the CBR, the Russian National Wealth Fund, and the Ministry of Finance of the Russian Federation.
“The Bank of England continues to take any and all actions needed to support the government’s response to the Russian invasion of Ukraine,” Andrew Bailey, the Bank of England Governor, said.
“We welcome the steps taken today by the UK government, in coordination with EU and US authorities, as an important and powerful demonstration of the UK’s commitment to the international rule of law,” he said.
The Treasury said the UK government intends to make further related designations this week, working alongside international partners. Restrictions will also be imposed against Russian financial institutions.
It will cover measures to prevent Russian companies from issuing transferable securities and money market instruments in the UK, in addition to the prohibition of the Russian state raising sovereign debt in the UK already announced.
It will also grant power to prevent designated banks from accessing Pound Sterling and clearing payments through the UK. Banks subject to this measure will be unable to process any payments through the UK or have access to UK financial markets.
Sunak's announcement also covers a set of measures to strengthen trade restrictions against Russia, including a prohibition against the export of a range of high-end and critical technical equipment and components in sectors including electronics, telecommunications, and aerospace.
There will also be an extension of financial and trade measures applying to Crimea to the DNR and LNR regions.
The UK government has said its sanctions are designed to "devastate" Russia’s economy and target Russian President Vladimir Putin directly and his inner circle, including Foreign Minister Sergey Lavrov and several billionaire oligarchs known to be close to them.