Key points
- Can restrict trade in commodities, technology or financial services.
- Freezing a country's reserves or cutting its banks off from SWIFT limits its access to the global financial system.
- Effects reach markets through commodity prices, supply chains and where money is allowed to flow.
Example
A cap on the price buyers may pay for a country's oil aims to cut its revenue while keeping its oil flowing to world markets.
In history
After Russia invaded Ukraine in 2022, Western governments froze around $300 billion of Russia's central bank reserves and cut several Russian banks off from SWIFT. The G7 also capped the price of Russian seaborne oil at $60 a barrel.
Related terms