The United States is ramping up efforts to reduce the revenues of unfriendly countries. This time, US President Joe Biden has adopted a law prohibiting the US Treasury Department from "engaging in transactions involving the exchange of Special Drawing Rights held by Russia or Belarus."
Thus, the new ban targets SDRs, an international reserve asset backed by the IMF "to supplement the official reserves of its member countries." Any member can exchange SDRs as well as convert them into currency. Such a scheme used to help Russia circumvent financial sanctions, but now the situation has changed. Joe Biden signed the Russia and Belarus SDR Exchange Prohibition Act of 2022, which bans the exchange of special drawing rights owned by these states. In addition, the new law requires the Treasury to "take measures to counter support for Russia and Belarus."
According to the act, the Department of the Treasury must "vigorously advocate for IMF member countries to prohibit transactions involving the exchange of SDRs held by Russia or Belarus, and direct US representatives to each international financial institution to oppose providing financial assistance to Russia or Belarus except to address the basic human needs of their civilian populations."
