/Pogled.info/ The Central Bank of Russia announced new measures to reduce banking operations in dollars and euros. The aim is to reduce the risks to citizens and businesses that have arisen since the blocking of Russian assets abroad and due to sanctions restrictions on payments.
Risk premiums
The report of the Bank of Russia “Financial market: new challenges in modern conditions” talks about the inevitability of abandoning the currencies of unfriendly countries in internal and external payment transactions.
Western countries froze foreign assets of the state and Russian banks. They also limited the possibilities of payments in reserve currencies, which became “toxic” in both international and domestic circulation.
Therefore, the regulator plans new premiums to the risk factors for loans and securities in foreign currency, depending on the issuer and the status of a country – “friendly” or “unfriendly” to Russia.
In addition, they explore the feasibility of using increased reserve ratios for bank liabilities in “toxic” currencies. The gradual abandonment of them, the Central Bank emphasizes, should be done evenly across all operations.
“The Central Bank strives to protect money circulation, foreign currency funds of companies and individuals as much as possible. The risks of further difficulties in foreign currency payments, their freezing are increasing. The accounts of the National Clearing Center (NCC) may be blocked, which will create difficulties when converting the main currencies of the Russian stock exchange. Therefore, the regulator proposes to limit the use of currencies of “hostile” countries”, notes Mark Goichman, chief economist at the Teletrade information and analytical center.
Rearranging the structure
As experts explain, the increased allowances will affect the determination of capital adequacy of financial institutions.
“These loans and securities will be weighted with a higher risk factor (additional charge). Therefore, banks may initially experience difficulties in fulfilling the capital adequacy requirements of the regulator,” says Olga Veretenikova, vice president of the analytical company “Borcell”.
However, as a result, banks will restructure the currency structure of assets. “Now it is more difficult for them to make payments in dollars and euros, processing time has increased significantly due to the tightening of the compliance procedure, money can be blocked at any time. Switching to payments in other currencies will reduce risks.” explains the analyst.
According to Veretenikova, the yuan, one of the most popular alternatives to the dollar under sanctions, will most likely come to replace it. It is a fairly reliable currency with relatively low volatility. In addition, more and more commercial transactions are carried out in national currencies. The trend will intensify as exports shift to Asian markets.
“Plucking” from the deposits
Thus, it will become even more expensive and less profitable for banks to raise funds in “toxic” currencies, as well as to issue loans in them. Devaluation measures in the banking sector will also affect customers of credit institutions.
“Conditions, commissions on such deposits, accounts and loans will become stricter. Someone will withdraw from the dollar and the euro. Savings, deposits will be “mined” for conversion into rubles and use of financial instruments in rubles. Or in other currencies – safe from the point of view of the risks of sanctions. For example, the Chinese yuan, the Hong Kong dollar, the UAE dirham, the Turkish lira, the currencies of neighboring countries,” says Mark Goichman.
Economists emphasize that there is no talk of a complete ban on dollars and euros. It is impossible to give them up: Russia still trades in foreign markets mainly in these currencies. But where they can be replaced, the Central Bank insures the risks.
“By shifting to assets of friendly countries, the Central Bank is protecting both citizens and corporations,” emphasizes Yulia Kuznetsova, Investment Advisor of the Central Bank.
The proposal of the regulator to transfer the savings of the state-owned companies in other currencies is also considered expedient by the experts.
“Trade turnover with Europe and the USA is decreasing, trade is reorienting towards Asian markets. Many Russian companies are already using yuan, as payments in them are much faster and practical,” notes Veretenikova.
All this, on the one hand, will benefit the ruble: demand for it will grow. But the opposite factors may prove strong in the future, holding back the strengthening of the Russian currency.
Translation: V. Sergeev
IMPORTANT!!! Dear readers of Pogled.info, they limit us because of our positions! Log in directly to the site www.pogled.info . Share on your profiles, with friends, in groups and on pages. In this way, we will overcome the limitations, and people will be able to reach the alternative point of view on the events!?
Subscribe to our YouTube channel/top right/: https://www.youtube.com
Become a friend of Look.info on facebook and recommend to your friends
–
