The United States and other Western countries have embarked on an economic war against Russia as a result of President Vladimir Putin's attack on Ukraine.
The latest sanctions are aimed at sparking a banking crisis, sending the Russian economy into a deep recession, and overwhelming Moscow's financial defenses, CNN reports.
"Our strategy, to put it simply, is to make sure that the Russian economy goes backward as long as President Putin decides to go forward with his invasion of Ukraine," a senior U.S. administration official told reporters, according to the news outlet.
The West has cut off Russia's two largest banks, Sberbank and VTB, from direct access to the U.S. dollar, and has taken steps to remove some Russian banks from SWIFT, which connects financial institutions.
Nearly $1 trillion worth of Russian assets have been frozen by sanctions, according to French Finance Minister Bruno Le Maire.
"Western democracies have surprised many by pursuing a strategy of exerting intense economic pressure on Russia through effectively cutting it off from global financial markets," Oliver Allen, markets economist at Capital Economics, said in a research note, CNN reports.
"If Russia continues on its current path, it is quite easy to see how the latest sanctions could be just the first steps in a severe and enduring severing of Russia's financial and economic ties with the rest of the world."
Analysts told the media outlet that never before has a global economy such as Russia's been targeted with similar-type sanctions, which very well could push the country’s largest banks to the brink of collapse.
"We will provoke the collapse of the Russian economy," Le Maire said Tuesday, CNN reports.
However, that will not be easy. Russia provides nearly 40% of Europe’s natural gas and 25% of its oil. Disruptions to those exports would raise already elevated global prices.
Putin also has been trying to sanction-proof Russia's $1.5 trillion economy in recent years, especially since the U.S. and its Western allies imposed sanctions on Moscow in 2014 following the annexation of Crimea and the downing of Malaysian Airlines Flight 17.
Russia has reduced government spending and stockpiled foreign currencies as it tried to wean its oil-dependent economy off the dollar. Moscow's central bank has amassed a war chest of $630 billion in reserves, CNN said.
About 50% of Russia's foreign-reserve stockpile has been rendered useless by the sanctions, according to Capital Economics.
"External conditions for the Russian economy have drastically changed," the Russian central bank said Monday, announcing that it would double interest rates to 20%. "This is needed to support financial and price stability and protect the savings of citizens from depreciation.”
The Institute of International Finance said the U.S. and its allies still could remove more Russian banks from SWIFT and further restrict their access to dollars and euros.
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