US Official: US “dramatically escalating” financial shock on Russia by cutting off largest banks

The US is "dramatically escalating" the financial shock on Russia, a senior Biden administration official said on Wednesday, by cutting off the country's largest banks, reported Reuters. The US is to impose full blocking sanctions on Russia's Sberbank and Alfa Bank, the official added, while US President Joe Biden is also set to sign a new executive order banning all new investment in Russia. 

The official explained that Sberbank is critical to Russia's financial system and holds one-third of Russia's total banking assets and added that Biden's new executive order will ensure that the recent private-sector exodus from Russia continues. More than 600 multinational corporations have already left the country, the official said. 

Russia will have to find new sources of dollars from outside the US and a new payment brought other than US banks to avoid falling into default, the official continued, adding that more actions will come from the EU that degrade Russia's status as a leading energy supplier.

The US remains hopeful that there is alignment with India regarding actions against Russia, and has been clear to China about the consequences of any effort to circumvent sanctions on the country, the official said. China is not openly indicating any intention to circumvent sanctions, but it is something the US is watching closely, the official warned. 

Finally, the official noted that if Russian President Vladimir Putin was to change course in Ukraine, then sanctions could be slowed and possibly reversed.