House approves Hill legislation to prohibit U.S. exchange of Russian-held reserve assets

Legislation sponsored by U.S. Rep. French Hill (R-AR) that would prohibit the U.S. Treasury Department from engaging in any transaction involving the exchange of Special Drawing Rights (SDRs) held by Russia or Belarus received approval on May 11 by the U.S. House of Representatives.

SDRs are an international reserve asset maintained by the International Monetary Fund (IMF) based on contributions from IMF member countries. They may be exchanged between member countries and may also be exchanged for currencies, according to the congressional record.

“Now, more than ever, it is imperative we don’t allow these SDRs to be used to provide Russia and Belarus a loophole around Western sanctions to fund their illegal war in Ukraine,” Rep. Hill said. “Passing this bill will assist in our efforts to exert maximum pressure on Russia and send a message to countries like China that they should not throw Vladimir Putin an SDR lifeline.”

The House voted 417-02 to approve the Russia and Belarus SDR Exchange Prohibition Act of 2022, H.R. 6899, which Rep. Hill sponsored on March 2. Since that time, the bill has gained 13 cosponsors, including U.S. Reps. Bryan Steil (R-WI), Andy Barr (R-KY), Ann Wagner (R-MO), Tom Emmer (R-MN), Trey Hollingsworth (R-IN), and Brad Sherman (D-CA).

“For over two years, I warned Treasury and the Biden administration about the flaws of the IMF’s SDR policy,” said Rep. Hill. “They’re not targeted, there is no accountability, and SDRs provide aid to countries that support genocide, terrorism, and now, illegally invade a sovereign nation. 

“They did not heed those warnings, which is why we find ourselves here today,” he said. “Russia alone holds over $25 billion of these IMF reserve assets, $17 billion of which the IMF gifted to Putin last year.”

If enacted, the measure also would require that the Treasury Department “vigorously advocate” for IMF member countries to prohibit transactions involving the exchange of SDRs held by Russia or Belarus, and direct U.S. representatives to the IMF to oppose any allocation of SDRs to Russia or Belarus, according to the congressional record bill summary.

H.R. 6899 on May 12 was received in the U.S. Senate, where it was referred to the U.S. Senate Foreign Relations Committee, which is already considering the related bill, S. 4079, introduced on April 25 by U.S. Sens. Rick Scott (R-FL) and Joe Manchin (D-WV).