The post claims that the reserves of the Central Bank of Russia increased by 5.5 billion Dollars within several days and that in the foreign currency reserve was 582 billion Dollars in January. What has been omitted in this post however, is that Russia cannot use more than half of these funds. Approximately 300 billion Euros of the Russian Central Bank reserves have been frozen by the EU and other G7 partners as a result of the sanctions imposed following the aggression of Ukraine.
Post on Facebook on the truth about the amount the of foreign currency reserves of the Russian Federation is lacking context, because it says that the foreign currency reserves in the Central Bank of Russia amount up to 582 billion Dollars, but that is not the actual reality. Namely, more than half of these funds have been frozen by the sanctions imposed on Russia following the aggression of independent and sovereign Ukraine.
The foreign currency reserves of the Russian Federation in the period from 30th December 2022 until 6th January 2023 increased by 4.5 billion amounting to 582 billion Dollars, reported the Central Bank of the RF, states the post.
The post – subject of this fact-checking – claims that the reserves of the Russian Central Bank increased by 4.5 billion Dollars within a few days and that the foreign currency reserves amounted up to 582 billion Dollars. The purpose of the post is to glorify Russia, to show its strength despite the war Russia is fighting in Ukraine for almost a year and the consequences suffered thereafter. What has been omitted from the post however is that Russia cannot use more than half of these funds. Subsequently, this post lacks appropriate context and therefore is public manipulation.
The American Justice and Finance Departments established a global operational group on 16th March 2022 as part of the extensive international sanctions imposed on Russia for invading Ukraine. Some members of the group are: Australia, United Kingdom, Canada, France, Germany, Italy, Japan and the European Commission.
Within the framework of 100 days of its establishment, the global group froze and blocked more than 330 billion Dollars, funds that belong to those sanctioning Russia and its Central Bank.
The blocked or frozen funds include funds of more than 30 billion Dollars that belong to sanctioned Russians (including yachts, ships, helicopters, property, pictures and other artwork) and more than 300 billion Dollars, funds owned by the Central Bank of Russia.
In March 2022, the European Commission established the Working Group “Freeze and Cease” to secure coordination of the activities of EU Members-States. With the help of the group, the EU Member-States froze 19 billion Euros worth of property of Russian oligarchs. Approximately 300 billion Euros of the reserves of the Russian Central Bank were blocked within the EU and other G7 partners.
To make the most of these funds and to start the reconstruction of Ukraine, the Commission presented two different options to the Member-States last November to ensure that Russia will be held responsible for the atrocities committed during the war in Ukraine. The Commission proposed the establishment of a new structure for managing the frozen assets and immobilzed public Russian funds in order to invest and use the funds for Ukraine.
- Short-term: establishing a structure for managing frozen public funds, investing and utilizing the revenue in favour of Ukraine.
- Long-term: once the sanctions are relinquished, the funds will have to be returned to the Central Bank. This could be linked to a peace agreement that will include compensation for damages caused in Ukraine. The funds that should be returned could be compensated with a military reparation.
The President of the Commission, Ursula fon der Leyen, stated that Russia must pay for the terrible destruction.
Together with our partners we will make sure Russia pays for the devastation caused with the frozen assets of the oligarchs and the funds of its Central Bank, said fon der Leyen.
The Russian Minister of Finance, Anton Siluanov, confirmed that back in March 2022.
The foreign sanctions imposed froze approximately 300 billion Dollars out of the 640 billion Dollars that Russia had in its gold and foreign reserves, said the Minister of Finance, Anton Siluanov, in an interview in March 2022.
Siluanov said that the West was pressuring China to restrict its trade with Russia in order to obstruct Moscow’s access to the State reserves that Russia keeps in Chinese Yuan. In addition, Siluanov said that Russia will comply with its sovereign debt obligations and pay debt-holders in Rubles until unfreezing of State reserves, published the national news agency RIA.
After Russia waged war on Ukraine, part of the sanction is also the black list of 1,241 persons and 118 entities, most of which are subjects of Russia and Belarus.
Regarding the increase of foreign reserves from 4.5 billion Dollars within a 6-day period, as mentioned in the fact-checked post, one should mention that the Ruble before 24th February 2022 or before the aggression on Ukraine and the Ruble used today, are not the same at all. Previously, the Ruble was traded on stock exchanges globally, although not in the same quantities as the Dollar and the Euro. Nevertheless, the purchase and sales of the Russian currency was possible and its value was determined according to the market circumstance in relations with the other global currencies. The Ruble was part of the international payment system i.e., Russian citizens could have purchased comodities abroad via Internet with their Visa and Master cards. Due to the sanctions, that is not possible today.
Russian authorties introduced a series of non-market measures to raise and sustain the value of the Ruble. First, part of the foreign currency revenue generated by Russian companies had to be exchanged in Rubles. It is becoming more and more difficult to withdraw foreign currency from citizens bank accounts in Russia and different restrictions apply, while some banks have introduced penalty fees. Part of the foreign currency funds on bank accounts of companies must also be withdrawn in Rubles instead of foreign currency etc.
On top of that, Russian Central Bank simply ceased to publish various data on the situation with the Russian economy as well as the state of affairs with the national currency. For many of the financial data coming from Russia, the sole source of information is Russian authorities and their data cannot be tested on the global capital markets due to the sanctions i.e., they are not subject to the demand and supply laws as other currencies are. Therefore, such data needs to be treated with reservations.
Due to the fact that the post claims that the Russian Central Bank has 582 billion Dollars foreign currency reserves, but does not clarify that more than 300 billion Dollars are frozen and cannot be used, we assess this post as manipulative i.e., it lacks context.
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