Treasury Secretary Yellen says US will address potential gaps in Russian sanctions

The United States will address potential gaps in tough sanctions imposed on Russia over its invasion of Ukraine, US Treasury Secretary Janet Yellen said on Wednesday, adding the measures would “continue to bite.”

Yellen said financial sanctions on the Russian central bank, commercial banks and members of the country’s wealthy elite were having a significant impact, as demonstrated by the rouble’s sharp fall.

“Russia is increasingly an economic island,” she said at the University of Illinois-Chicago after visiting Chicago’s Ukrainian Village neighbourhood.

“We will continue to look at how the sanctions work and whether there are leakages and we have the possibility to address them.”

Asked whether sanctions to curb Russia’s oil and gas exports could follow, she said “nothing is off the table,” but added that the United States had not taken this step to spare Americans, Europeans and other people around the world from “punishing consequences.”

Sanctions imposed last Sunday and Monday have so far restricted 80% of the Russian banking sector’s assets and “immobilized” about half of the Russian central bank’s assets, she said.

The rouble, which has lost about a third of its value since the start of the year, touched a fresh record low of 110 to the dollar in Moscow on Wednesday as the country’s financial system teetered under the weight of Western sanctions.

Russia calls its actions in Ukraine a “special operation” that is not designed to occupy territory but to destroy its neighbour’s military capabilities.

The former chair of the US Federal Reserve said she knew there were concerns about members of Russia’s elite using cryptocurrencies as a possible means to evade sanctions, but noted there were anti-money laundering laws in place to prevent that from happening.

“That is a channel to be watched,” she said. “But ... many participants in the cryptocurrency networks are subject to anti-money-laundering (laws) and sanctions. So it’s not that that sector is completely one where things can be evaded.”

Yellen said she does not expect the sanctions on Russia to have a major impact on the economic trajectory of the United States, due to limited US trade and financial connections with Russia. Their effects will most likely be transmitted through higher energy prices, she said, adding that Biden was seeking to keep the United States well-supplied with oil.

At the University of Chicago’s Innovation Center, she called for Congress to pass key Biden economic investment proposals, including funding for research, child care, universal pre-school and clean energy.