FedFin Assessment: Sanctions, Crypto, CBDC Outlook all Change Following Invasion

In this report, we address many of the questions we’ve received about U.S. policy in the wake of Russia’s invasion into Ukraine.  We focus in particular on sanctions, but also address longer-term policy implications for the global payment system, cryptocurrency, and CBDC.  It is impossible to forecast final outcomes since Russia’s intentions are unknown with regard not only to Ukraine, but also peripheral nations it believes reside within its empire that are NATO members. Indeed, developments in some of them (e.g., Eastern Poland) are already arguably within the range of actions that might trigger NATO intervention and, with it, that of the U.S. and many consequences beyond the already-dangerous ones attendant to the Ukraine invasion.  As is usual, we will not attempt to forecast Fed monetary policy or that in other nations, but we here note the stresses created by global financial-market uncertainty and broader macroeconomic stress.