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Nine questions on the sanctions and the economic consequences of the war
The European Union has imposed a range of sanctions on Russia. What are financial sanctions, what are the consequences of these sanctions for the Netherlands and how does the war affect our economy? Read our answers to the main questions.
Published: 25 February 2022
1. What are sanctions?
Sanctions are political measures used against persons, organisations or countries that violate international law, human rights or democratic principles. They can be imposed by international organisations such as the United Nations (UN) or the European Union (EU). National authorities can also impose sanctions as part of their security policy.
2. Why are they used?
Sanctions are often imposed against individuals, organisations or countries as financial punishment for certain actions. There are three types of financial sanctions:
- orders to freeze financial assets of designated individuals or organisations
- prohibitions on making assets available to these individuals or organisations
- a ban or restrictions on providing financial services.
Sanctions are intended to hit individuals, organisations or countries, so that they change undesirable behaviour or to deter other parties from displaying the same undesirable behaviour.
3. What sanctions have been imposed against Russia?
Sanctions have been imposed against a number of Russian individuals, banks and other organisations, including against 351 members of the Russian Duma. You can find the European Union's sanctions here:
4. Do the sanctions affect Dutch citizens who want to conduct financial transactions with Russia?
The sanctions affect everyone who wants to conduct transactions from the Netherlands with sanctioned individuals, banks and other organisations. This may mean, for example, that a payment will not be made if an individual is on a sanctions list.
5. Do the sanctions affect Dutch citizens who conduct transactions with Russian banks or Dutch subsidiaries of Russian banks?
To the extent that Russian banks are subject to European Union sanctions, this may affect anyone wishing to conduct transactions with these banks or their affiliated organisations, for example, subsidiaries of these banks. If you have any questions, you should contact your bank.
6. What is the role of the Dutch financial sector and De Nederlandsche Bank?
Banks and other financial institutions are obliged to comply with the sanctions imposed against Russia by the European Union. They must, for example, check whether a transfer to Russia is prohibited under the sanctions. Also, banks and other financial institutions may not be involved in lending funds or issuing securities, such as bonds, to the Russian State, the Central Bank of Russia or any party acting on behalf of the Central Bank of Russia.
De Nederlandsche Bank checks that banks and other financial institutions have the necessary procedures and measures in place to comply with the sanctions rules. We assess the effectiveness of these procedures and measures on a risk basis and intervene when necessary.
7. What is the impact of the war on trade with Russia and Ukraine?
The direct impact is expected to be limited. Exports to Russia are only 3% of all exports for the euro area as a whole, and for the Netherlands it is no more than 1%. For Ukraine, these percentages are even lower.
8. The war leads to higher energy prices. Will inflation also go up?
We expect the rising energy prices to lead to higher inflation in the short term. The question is whether these higher levels will be permanent. We cannot foresee this at the moment. The European Central Bank keeps a close eye on the development of inflation. On 10 March, the Governing Council of the European Central Bank will meet to discuss this. By then, we will probably have a better idea of what this means for inflation in the medium term.
Would you like to know more about inflation and the European Central Bank? See: Inflation │De Nederlandsche Bank (dnb.nl)
9. What can the ECB do to limit the economic impact?
In uncertain times, the ECB closely monitors economic and financial developments. It can take measures to ensure that financial markets continue to function as smoothly as possible. It can also ensure that banks, companies and governments that need financing are able to obtain it through various programmes. If tensions in the economy and in financial markets continue to rise, the ECB can take further measures.
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