Russia may ban circulation of the U.S. dollar in the country, the Azeri-Press Agency reported on Wednesday (Nov. 5).

A bill has already been introduced in the Russian Federation’s legislature that would officially ban possession or use of dollars in the country. If the bill is approved and signed into law, Russian citizens will be required to close their dollar accounts in Russian banks within a year and exchange their dollars in cash for Russian rubles or other countries’ currencies.

Under the terms of the proposed law, after the one-year grace period, dollar accounts will be confiscated and dollars will be officially impossible to obtain in Russia, with the exception of exchange operations carried out by the Russian Central Bank and use by government agencies, including the country’s Foreign Intelligence Service.

A dollar ban would represent a major escalation of the financial-services needle match going on between the U.S. and Russia in the wake of Russia’s Ukraine actions. After the U.S. sanctioned some Russian banks and Visa and MasterCard cut off Russian clients associated with those banks, the Russian government required the card brands to move to a government-run payments network or pay multi-billion-dollar security deposits to the Russian central bank. Western proposals have also been floated to cut Russian banks off from the SWIFT financial messaging network.

But with the majority of Russians distrustful of banks and 90 percent of transactions in cash — and frequently in dollars for large purchases — a dollar ban would have a much larger impact on ordinary Russians than any previous sanctions-related actions.

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