Utilization of Russia's frozen assets: An expert's assessment

During the full-scale war, Ukraine's allies decided to freeze the assets of the Russian central bank totaling $300 billion. Representatives of the G7 countries agreed that these assets will remain frozen until the conflict is over. Speaking to Delo.ua, expert Yulia Pavytska from the Kyiv International Institute for Economic Research (KIER) analyzed how international sanctions affect the Russian economy and have denied it more than $170 billion.

Currently, the frozen assets of the Russian central bank are located in different countries:

$220 billion in the European Union, including $190 billion in Brussels;
The balance is frozen in the United States and Japan.
"The Central Bank of Russia recognizes that this is problematic. This significantly affects its policy and monetary decisions, as the freezing of assets limits the number of available instruments to support the ruble," Pavitskaya said.

Since the fall of 2023, the Russian ruble has devalued by about 40%. One of the main factors behind this was the decline in export earnings, especially from the energy sector.

According to the expert, in order to curb the devaluation of the ruble, which at one point reached 100 rubles per dollar, the central bank took measures to change the discount rate (which increased by 8.5 percentage points) and returned to strict control over capital flows, requiring exporters to sell foreign exchange earnings.

"If Russia still had access to reserves, they could have used them for currency interventions to support the ruble. Thus, the central bank's decisions would have been less stringent than in the case of capital controls," Pavitskaya explained.