Over the weekend, the US and the EU pledged to block Russian access to the SWIFT payments system.

On Monday, Switzerland ditched its historical neutrality to join the EU sanctions. This opened the door for the Switzerland-based Bank for International Settlements to further freeze Russia economically.

The Bank for International Settlements (BIS), the Swiss-based global financial umbrella body nicknamed the “bank for central banks”, has said it will not be an avenue for any circumvention of western sanctions placed on Russia for invading Ukraine.

The Bank of Russia has responded by blocking payments, including those on $29 Billion of foreign held Russian debt (OFZ)--the interest payments on which are due tomorrow.

The Bank of Russia issued the instruction to depositaries and registries as part of a raft of measures announced this week that included a freeze on local security sales by foreigners. It could leave foreign investors who held almost 3 trillion rubles ($29 billion) in the debt at the start of February unable to collect income on their holdings, which are already blocked from sale by restrictions.

“Issuers have the right to make decisions on the payment of dividends and the making of other payments on securities and transfer them to the accounting system,” the central bank said in an emailed reply to questions. “However, the payments themselves will not be made by depositories and registrars to foreign clients. This also applies to OFZ.”

Western financial markets are about to get very interesting as the inevitable consequences of sanctions unfold.