Column: Russia central bank freeze may hasten ‘peak’ world FX reserves

Russian Rouble and U.S. Dollar banknotes are seen in this illustration taken, February 24, 2022. REUTERS/Dado Ruvic/Illustration

LONDON, Mar 2 (Reuters) – An end to the era of foreign currency stockpiling may be nigh.

This week’s dramatic freeze of the Russian central bank overseas assets in response to Moscow’s invasion of Ukraine may now question just why countries build foreign currency reserves at all.

G7 and European Union governments on Saturday moved to block certain Russian banks’ access to the SWIFT international payment system – but went one step further than many expected by paralyzing about half the Russian central bank’s $630 billion worth of foreign currency and gold reserves. read more

In what one Washington lawyer described as the “biggest hammer in the toolshed”, the move undermines Moscow’s ability to defend the rouble – which has lost up to a quarter of its value since Friday alone – or recapitalise its sanctioned banks as they face nascent…