Weaponisation of finance: the role of European central banks and financial sanctions against Russia. Issue 5 (29th July 2023)

• Record Type: Journal Article
• Authors: Quaglia, Lucia; Verdun, Amy
• Is Part Of: West European politics. Volume 46:Issue 5(2023)
• Page Start: 872
• Page End: 895
• Publication Date: 2023-07-29
• Subjects: Central banks -- ECB -- financial sanctions -- geopolitics -- Principal-Agent -- Russia -- Ukraine; Europe -- Politics and government -- 1945- -- Periodicals; 320.94
• DOI: 10.1080/01402382.2022.2155906
• Languages: English
• ISSNs: 0140-2382

Abstract

Abstract: In response to Russia's full-scale invasion of Ukraine, the Group of Seven (G7) countries and the European Union (EU) adopted a variety of financial sanctions, including the freezing of foreign reserve assets of the Central Bank of Russia held by other central banks. Drawing on a Principal-Agent framework and on speeches, newspaper articles and interviews with policy-makers, this study examines what it means for the ECB and the central banks of the Eurosystem to be involved in these sanctions. As a consequence of these actions, these central banks have been enlisted in monetary and financial warfare. Moreover, the three-fold objective of the ECB has de facto effectively been reweighted somewhat, as the focus on 'price stability' (primary objective) has become seemingly temporarily less prominent. Instead, the secondary and tertiary objectives have moved centre-stage, favouring geopolitical considerations.