Russia moved one step closer to a potential default on its foreign currency debt on Wednesday after the country’s finance ministry said it was forced to make payments to holders of its dollar-denominated bonds in roubles.

The decision to pay in the Russian currency comes after the US Treasury department blocked US banks from handling dollar payments from Russia, halting $649mn of interest and principal due on Monday. JPMorgan, the so-called correspondent bank responsible for handling the transaction, declined to process the cash after seeking guidance from US authorities, according to a person familiar with the matter.

“Due to the unfriendly actions of the US Treasury?.?.?.?the Russian Ministry of Finance was forced to involve a Russian financial institution to make the necessary payments,” the ministry said in a statement on Wednesday. Payments will instead be made to rouble-denominated accounts in Russia and the proceeds can be converted into dollars following the “restoration of the Russian Federation’s access to foreign currency accounts”, it added.