The United States banned all transactions with the Central Bank of Russia on Monday, announced the Treasury Departmenta sanction of immediate effect and unprecedented severity taken in coordination with various allies of Washington, in response to the invasion of Ukraine.

“This decision has the effect of immobilizing all assets that the Central Bank of Russia has in the United States or in the hands of American persons,” a statement said, which will severely limit Moscow’s ability to defend its currency and support its economy.

Washington issued the ban before the opening of US markets.

The decision, tied to similar sanctions taken by many US allies, will severely limit Moscow’s ability to use its abundant foreign exchange reserves to buy rubles.

Such operations to defend the declining ruble “will no longer be possible and ‘fortress Russia’ is helpless,” a senior US official said.

The source estimated that these coordinated sanctions will trigger a “vicious circle” for the Russian economy and predicted: “Inflation will surely skyrocket, purchasing power will collapse, investments will collapse,” he said.

“Our goal is to ensure that the Russian economy contracts while President Putin decides to go ahead with the invasion of Ukraine,” the senior official said.

The United States also implemented sanctions on Monday against the Russian Direct Investment Funda public financial institution used to raise funds abroad and headed by Kirill Dmitriev, a close associate of President Putin.

“This fund and its management are symbols of deep corruption in Russia and its influence peddling” abroad, the source said.

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