The Biden administration froze Russian assets and is taking actions to seize assets of rich Russians who are not even member of the Russian government. Taking individual's assets may not be legal, and other countries are watching. This will certainly cause overseas private investors to reconsider if they want to put their funds into businesses or real estate inside USA when those assets can be seized without the individual owner doing anything wrong.
For nations, why take further risk of holding USD in banks or holding USA debt, when it can be seized at any time? Nations will more quickly move away from the US dollar and away from USA banking. This will lead to greater use of local currencies and alternative bank clearing systems which the USA does not control. Certainly no nation would want to continue to have the Federal Reserve in New York store their physical gold.
International trade will become more difficult, Russia and China will strengthen their relationships, and foreign investment in USA will decline. An observer may wonder if Joe Biden is purposefully attempting to restrict international trade which will harm people in countries dependent upon food imports.
Rational countries with a capital account surplus must now save in another currency.
U.S., allies target 'fortress Russia' with new sanctions, including SWIFT ban
The United States and its allies on Saturday moved to block certain Russian banks' access to the SWIFT international payment system in further punishment of Moscow ...
Russia central bank freeze may hasten 'peak' world FX reserves
This week's dramatic freeze of the Russian central bank overseas assets in response to Moscow's invasion of Ukraine may now question just why countries build foreign currency reserves at all.
G7 and European Union governments on Saturday moved to block certain Russian banks' access to the SWIFT international payment system - but went one step further than many expected by paralyzing about half the Russian central bank's $630 billion worth of foreign currency and gold reserves.
... leaders have committed to target the Russian Central Bank — the single-most important financial institution in Russia. We are collectively planning to impose measures to ensure Russia cannot use its Central Bank reserves to support its currency and thereby undermine the impact of our sanctions.
This will show that Russia’s supposed sanctions-proofing of its economy is a myth. The 600-billion-plus war chest of Russia’s foreign reserves is only powerful if Putin can use it and without being able to buy the Ruble from Western financial institutions, for example, Putin’s Central Bank will lose the ability to offset the impact of our sanctions. The Ruble will fall even further, inflation will spike, and the Central Bank will be left defenseless.
Third, this coming week, we will launch a multilateral transatlantic task force to identify, hunt down, and freeze the assets of sanctioned Russian companies and oligarchs ...
