# Publications

Toughening Financial Sanctions on Russia

Enforcing Energy Sanctions and Reducing Shadow Reserves Effectively

Financial sanctions are key in enforcing restrictions on Russian energy exports – in particular the G7/EU oil price cap regime –, due to financial institutions’ critical role in cross-border transactions. While the energy sanctions regime is having an impact on export earnings and budget revenues, evidence for potentially widespread violations is also emerging. Moreover, favorable external dynamics have allowed Russia to accumulate substantial assets abroad – “shadow reserves” –, which need to be kept out of reach of the regime.

DGAP Policy Brief No. 10, May 16, 2023, 10 pp.

Key Findings 

Task central banks and supervisory authorities with the identification of Russian foreign assets to ensure that funds cannot be used to widen monetary and fiscal policy space.
Limit channels for energy-related transactions to improve transparency.
Strengthen documentation requirements for financial institutions within the price cap regime to allow for more effective implementation and enforcement.
Punish sanctions violators through their reliance on the international financial system.
Address loopholes in the sanctions regime, including, possibly, through the strategic and limited use of secondary sanctions.

The PDF version here.

DGAP Policy Brief No. 10, May 16, 2023, 10 pp.-COVER