The United States prevented Russia from paying its bondholders more than $600 million on Monday from the reserves the country holds in US-based banks, which could force the Kremlin to use its dollar reserves to pay off debt.

The US move comes after the Russian invasion of Ukraine, which began on February 24.

"Russia will have to choose between draining the remaining valuable dollar reserves, entering new revenue, or defaulting," a Treasury spokesman told Reuters.

As part of the sanctions against Russia, the United States has frozen the Russian Central Bank's access to about $300 billion in foreign currency and gold reserves held in American banks. However, the Treasury was allowing the Russian government to use this money to make coupon payments on dollar debts on a case-by-case basis.

But the ministry decided on Monday to prevent Russia from doing so, as the principal repayment became $552.4 million on a bond outstanding. A separate $84 million coupon was to be paid, also on Monday, for 2042 dollar sovereign bonds.

What is sovereign debt?

Sovereign debts are bonds that countries issue in foreign currency in order to finance some strategic and development projects that need tools and materials imported from abroad. Likewise, countries prefer to issue bonds in relatively stable foreign currencies, such as the dollar and the euro.

Pay off in gold

Russia has the ability to make payments using the gold and foreign currency assets still available to it, as the US was only able to freeze access to about $300 billion of Russia's total reserves of about $640 billion.

However, using these reserves to service its national debt could mean the country will spend less on other expenditures, including the ongoing war against Ukraine.

This could have major repercussions, not only for Russia but for international markets as well. Russia has a total of 15 international bonds outstanding, with a combined nominal value of about $40 billion.