MOSCOW (Sputnik) – Russian Finance Minister Anton Siluanov and Chinese People’s Bank Governor Yi Gang signed on 5 June an intergovernmental agreement to switch to national currencies in mutual payments, the Izvestiya newspaper reported on Friday, citing a letter from the Russian Finance Ministry.
According to the newspaper, the information about the accord is contained in the letter of Deputy Finance Minister Sergey Storchak to the chairman of the Russian lower house’s Committee on Financial Market, Anatoly Aksakov. The letter was a reply to Aksakov’s inquiry about the ministry’s efforts to intensify work on settlements with economic partners in national currencies and thereby “strengthen the country’s economic security.”
The letter also notes that new mechanisms for payments in national currencies between Russia and Chinese businesses were already under development.
Aksakov, in turn, told the newspaper that one of the options could be creating “gateways” between the Russian and Chinese analogues of the SWIFT payment system. An increase in payments in national currencies however will also require creating a market of ruble and yuan financial instruments, the senior lawmaker stressed. This, according to Aksakov, will let the two nations hedge risks of exchange rate fluctuations in bilateral trade. As a result, the share of ruble payments with China may rise from the current 10 percent to 50 percent in the coming years, the lawmaker estimated.
Three sources close to the Russian Central Bank, meanwhile, told the newspaper that Russia’s VTB Bank and Trade Bank of China would be authorised to carry out such payments.
Moscow has urged its trading partners on multiple occasions to abandon dollar-denominated transactions in light of the US using its currency to pressure other states to fall in line with Washington’s agenda.
Russia dumped most of its holdings in US government bonds in 2018 amid one of the sanctions waves, focusing instead on buying gold. In recent years, Moscow has also actively been promoting the idea of switching to national currencies in trade with various foreign partners.