Economic Impacts of Sanctions in the case of Russia

March 4, 2022

Difficult times require good information and good judgments. Specifically the war in Ukraine. GIC College of Central Bankers Chair, and GIC Vice Chair, Peter A. Gold, Esq., asked the College of Central Bankers Fellows and CCB Advisory Board Members to comment on how the recent economic sanctions may impact Russia’s economy. We are pleased to share the analyses below for your review and sincerely invite your comments.

College of Central Bankers Fellow: Katarzyna Zajdel-Kurowska, Former Board Member of the Management Board of the National Bank of Poland

It’s unbelievable what has happened.  All possible sanctions should be imposed to stop this war (including SWIFT). Poland condemns Russian action and stands strong with Ukraine. The National Bank of Poland has renewed the SWAP agreement with the National Bank of Ukraine to support its foreign reserves.

Central banks should play a strong role to support macroeconomic and financial stability of the country and the region. Countries in the Central Europe Region are facing an unprecedented inflow of refugees. Humanitarian aid is needed and much appreciated.

The world as we know is at stake. The Russian invasion on Ukraine is a violation of international law and should be condemned by the international community. Ukraine needs strong support, and all can help, including the central banks. 

Central banks should play a strong role in supporting the National Bank of Ukraine in stabilizing the exchange rate by providing liquidity support via FX SWAP lines. Last week, the National Bank of Poland renewed the FX SWAP agreement for the National Bank of Ukraine up to PLN (Polish Złoty) 4 bn (equivalent to USD 1 bn).

Many fake news and opinions about sanctions are in the public domain. We should take an active role in explaining how financial and payment systems operate. What’s SWIFT, what are credit lines, how VISA/MasterCard payment systems operate etc. What will be the real impact of economic and financial sanctions on inflation and monetary policy?

This war will definitely change the world.


College of Central Bankers Advisory Board Member: J. Paul Horne, Active Independent International Market Economist

What are the interactions between central banks and SWIFT transactions? How, for instance, do the CBs keep track of mostly confidential transactions passing through SWIFT?

Does SWIFT report aggregated numbers to the central banks, Treasury/Finance Ministries or the BIS? How do the CBs and SWIFT sort out the volume of currencies involved, especially when two or more currencies are involved in a single transaction? Will our sanctions on Russian use of SWIFT affect international monetary flows significantly?

Does the BIS track public and/or private transactions in member countries’ currencies through SWIFT? And finally, how does the Fed, the ECB and other central banks interact with SWIFT?


College of Central Bankers Fellow: William Poole, Former President of the Federal Reserve Bank of St. Louis

My impression, and only that, is that countries are usually successful in getting around economic measures. Thus, there is a danger that Western governments will rely too heavily on these measures and not act on steps that could really make a difference. I would put two such steps at the top of my list: EU membership for Ukraine and NATO membership.

I would also hope that the CIA could contribute by arranging agents who would harass the Russian military, both in Ukraine and Russia.

Lawyers should be recommending that Putin and top govt. officials be referred to European Court of Justice as war criminals. That would justify seizing the property of these officials and turning it over to Ukraine to help provide resources to rebuild infrastructure Russians destroyed. I am surprised, and disheartened, that there has been no press discussion of which I am aware that Putin should be tried as a war criminal.

All opinions expressed by the author are their own. They do not reflect the opinions or views of the Global Interdependence Center or the College of Central Bankers unless expressly stated otherwise by the GIC or CCB.

The Global Interdependence Center is a neutral, nonpartisan nonprofit organization that convenes conferences and events around the globe to explore important topics related to the global economy. The College of Central Bankers, operating under the administrative umbrella of the GIC, is comprised of former leaders of the world’s central banks and its distinguished Advisory Board, all of whom are experts in their fields.

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