The United States will likely end an exemption allowing Moscow to pay its foreign debts with dollars held in Russia, the US treasury secretary said Wednesday, a move that could push Vladimir Putin's country into default.

"When we first imposed sanctions on Russia, we created an exemption that would allow a period of time for an orderly transition to take place and for investors to be able to sell securities," said Janet Yellen.

"And the expectation was, that it was time limited. So I think it's reasonably likely that the licence will be allowed to expire."

Punishing sanctions imposed following Russia's invasion of Ukraine in late February have largely severed the country from the international financial system, blocking Moscow's ability to access dollars held in US banks to pay its debts.

The Russian government has attempted to pay in domestic currency, but many of the bonds do not allow repayment in rubles.

As a result, Putin's government has had to turn to US dollars held in Russia to meet those payments -- an escape clause from default that is due to expire on May 25.

That expiry date is also two days before Russia's next debt service payment is due.

Yellen, speaking to journalists before a G7 meeting of finance ministers in Bonn, said a final decision has not been made, but she thought it is "unlikely" that the exemption would be renewed.

"Russia is not able right now to borrow in global financial markets. It has no access to capital markets. If Russia is unable to find a legal way to make these payments, and then they technically default on their debt, I don't think that really represents a significant change in Russia's situation," she said.