The question of freezing Russian foreign exchange reserves was raised at the ECB press conference. Enough to revive the interest in bitcoin as an international reserve currency…
$300 billion “frozen”
The governments of the United States, Australia, Canada, Japan, the United Kingdom, the European Commission and the Eurozone seized approximately $300 billion belonging to the Russian central bank immediately after the invasion of the ‘Ukraine.
This colossal sum represented almost half of Russian foreign exchange reserves at the time of the freeze. Most of this money – approximately 200 billion euros – is frozen by the European Central Bank and Euroclear.
By the way, this is 200 billion in the form of bonds of eurozone states. So this is money that the G7 governments owe to Russia.
To these 300 billion dollars are added tens billions of dollars in assets (planes, yachts, boats, etc.) belonging to private Russian entities. The United States has already transferred several million dollars in assets confiscated from a Russian billionaire to Ukraine.
Today, the question arises about the transfer of the Russian central bank’s reserves to Ukraine.
Treasury Secretary Janet Yellen declared only “significant legal obstacles” opposed the confiscation of Russian government assets. Nonetheless, a bipartisan group of US lawmakers introduced a bill aimed at giving Joe Biden the legal authority to do so.
The leaders of the European Union are also thinking about it. “The issue of confiscation of Russian assets is complex”declared Christine Lagarde.
“The financing of the reconstruction of Ukraine must respect the international legal environment in which we operate. We will have to be particularly attentive to the international monetary order and the rule of law which have prevailed for decades”she added.
The President of the ECB seems more in favor of paying back to Ukraine the interest generated by the seized Russian assets, rather than confiscating everything. That’s more than 3 billion dollars per year.
Will the G7 plunder Russia?
G7 countries are divided on the issue of Russian assets. The boomerang effect could prove painful.
“The United Kingdom is prepared to provide Ukraine with a loan in the amount of Russia’s frozen assets, on the grounds that the Russian Federation will be forced to pay reparations after the end of the conflict”declared British Foreign Minister David Cameron.
Washington supports total confiscation. “Regarding Russian assets, we are examining options related to the seizure of these funds”declared Janet Yellen, Secretary of State of the US Treasury.
“This is just one of the possible strategies. We are studying a number of different strategies that would allow us to use these assets in favor of Ukraine”she added.
However, France, Germany and Italy are opposed to it. Emmanuel Macron opposes a seizure “contrary to international law” and that “would weaken Europe”.
The President of the European Commission Ursula von der Leyen is also of the opinion of taking interest generated by Russian assets “to jointly purchase military equipment for Ukraine”.
Same story on the side of Switzerland where the Cantonal Council approved the idea of using frozen Russian assets in favor of Ukraine. We’re talking over $8 billion.
Russian Foreign Minister Sergei Lavrov warned that Russia will respond to any permanent confiscation of Russian assets:
“If Russian assets are seized, we can withhold funds from Western countries that we froze in response to the seizure of Russian foreign exchange reserves. There is no doubt that we will respond appropriately. »
Blessed bread for bitcoin
Supporters of confiscating Russian assets say the US president can seize Russian assets. After all, Presidents Ronald Reagan, George Bush and Joe Biden looted Iranian, Iraqi and Afghan assets respectively…
But Moscow is not Kabul. The European Central Bank has privately warned EU leaders that seizing Russian assets could damage the international reputation of the euro as the second international reserve currency, increase borrowing costs for European governments and damage relations. EU trade.
Similar concerns are being expressed in the United States regarding the dollar, which represents 58% of global foreign exchange reserves. Some financial experts estimate that there is no cause for alarm. They argue that there are few alternatives to the dollar, the euro and the other G7 reserve currencies.
In fact, the China seems to prefer to maintain exchange controls rather than attract foreign savings. The risk is that the yuan appreciates and undermines its industry, which could cause social unrest in this country of 1.3 billion people.
So why hesitate? Because there is actually an alternative. Bitcoin is a technological breakthrough that made it possible to create for the first time a liquid, divisible store of value that exists in absolutely finite quantity.
The Mona Lisa is not divisible. Gold is not liquid. Quite the opposite of bitcoin which is a currency as well as an electronic payment system, two-in-one.
Stateless, anti-inflationary and uncensorable, bitcoin is designed to replace the euro and the dollar as international reserve currencies. Stripping the world’s leading nuclear power would be fantastic publicity for bitcoin.
Don’t miss our article: “Bitcoin must replace the dollar”.
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