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News Tip: 'U.S. Has A Lethal Arsenal Of Financial Weaponry' to Use Against Russia

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Campbell HarveyProfessor, Fuqua School of Business, Duke Universitycharvey@duke.eduhttps://www.fuqua.duke.edu/faculty_research/faculty_directory/harvey/Harvey specializes in financial markets, global risk management and portfolio management.Quote:"The U.S. has a lethal arsenal of financial weaponry that could be triggered in the event of a Russian invasion of the rest of Ukraine.""First, they could expand the freezing of Russian assets. This mainly hits the oligarchs who are Putin's main supporters. Indeed, for the past few weeks, an enormous amount of money has been pulled from the West in anticipation of a freeze.""Second, and more effectively, the U.S. could force SWIFT (Society for Worldwide Interbank Financial Telecommunications) to suspend service for all Russian financial institutions. This makes it very difficult to transfer money between banks. The SWIFT sanctions imposed on Iran in March 2012 are viewed as a decisive victory in getting Iran to the bargaining table.""There is one major complication with SWIFT -- it is based in Europe. The U.S. does not have direct control over SWIFT. Indeed, the Senate Banking Committee had to approve sanctions against SWIFT in order to get the organization to target Iran in 2012. Iran is different than Russia because the European economies are interlinked with Russia both for exports and imports.""These two sets of sanctions will plunge Russia into a deeper recession. Furthermore, the ruble will crumble further and there will be a rout the stock market."                                                                     _  _  _  _ Duke experts on a variety of other topics can be found at http://newsoffice.duke.edu/resources-media/faculty-experts.###