As Western sanctions keep Moscow isolated from global networks, Russia’s top banks have strengthened their ties to China’s currency and financial system.
Sberbank announced on Tuesday that it has begun lending money in yuan in order to replace dollar and euro transactions.
According to Reuters, Sberbank CEO German Gref said at Russia’s Eastern Economic Forum in Vladivostok, “I don’t think Russia will return to such a situation of the dollar’s influence on the domestic economy.”
VTB also announced on Tuesday that it is the first Russian bank to launch yuan-based money transfers to China outside of the SWIFT messaging network, which serves as the global financial system’s backbone.
Single-transaction transfers are limited to approximately 20 million roubles, or $328,677, while monthly transfers are limited to $100 million.
Later this year, the bank will also begin lending in yuan and other “friendly” non-Western currencies.
“The new reality is leading to a massive rejection of the use of the dollar and the euro in international payments,” VTB CEO Andrei Kostin said, adding that the launch of the yuan transfer system will significantly simplify the work of Russian companies and individuals with Chinese partners, increasing the yuan’s popularity in our country.
While Russia has developed its own network known as the System for Transfer of Financial Messages (STFM), VTB stated that there is still a need for an alternative to SWIFT that is not based on STFM.
In response to Russia’s invasion of Ukraine, Western sanctions have targeted the Kremlin’s ability to bank globally, cutting the country off from SWIFT and freezing its foreign-exchange reserves held abroad.
However, since the February invasion, Russia has embraced the yuan as a viable alternative payment method, with rouble-yuan trading volumes skyrocketing and Russia now the third-largest market for yuan transactions outside of the Chinese mainland.
Don’t forget to follow us on Facebook | Instagram | Twitter | LinkedIn to get the latest updates from Cape Town Tribune