Chinese banks cut ties with Moscow exchange amidst new sanctions

[Polds4OSU]

Russia in a tough Spot and their Economy is on the Brink with this news

99% of Russia's cross border transactions are done with the Yuan..after they replaced the US Dollar for it after US sanctions for the Ukraine invasion went into effect

Trading of the Yuan on Russian markets has plummeted 50% since January and down 33% from June to July
In May.....54% of ALL trading done on the Moscow Exchange was done in Yuan Currency.
Now the Bank of China has pulled out and Chinese banks are now severing ties with the Moscow Exchange


Putin is going to have two options. Start a World War and Hope he Wins OR pull back from Ukraine to end the Sanctions.

Chinese banks cut ties with Moscow exchange amidst new sanctions

Chinese banks are severing ties with the Moscow Exchange due to sanctions. This means that Russians will lack access to the yuan, which is currently used for 99% of cross-border transactions, as reports say.

Bank of China has disconnected the Moscow Exchange from the yuan, reports say.

The volume of yuan trading on the Moscow Exchange has plummeted: in July, it averaged one-third less than in June and half of what it was in January," adds "Rzeczpospolita".

The Chinese currency has replaced the dollar​

The Chinese yuan became the primary settlement currency in Russia when new sanctions imposed by the West on the Moscow Exchange came into effect in mid-June following Vladimir Putin's military invasion of Ukraine. As a result, Russians lost easy access to dollars and euros.

The Kremlin faces a significant challenge as "the Russian financial system is chronically short of Chinese currency", according to Mikhail Vasiliev, chief analyst at Sovcombank, speaking to the Frank RG portal. Russian companies primarily acquire the yuan through trade, not directly from Chinese banks.

In its June statement, the Bank of Russia emphasized that over the past two years, the role of the US dollar and the euro in the Russian market has consistently diminished. This shift is due to redirecting trade flows to the East and changing the settlement currency to rubles, yuan, and other currencies from countries friendly to Russia. According to data from the Russian central bank, in May, the yuan accounted for 54% of the trading volume on the Moscow Exchange, making it the primary currency in exchange trading.

 

[steross]

Putin is going to have two options. Start a World War and Hope he Wins OR pull back from Ukraine to end the Sanctions.

If China is pulling away from them, I don't understand what they mean. "World war" implies two large fighting alliances. Russia taking on everyone isn't really a world war. Being that we still have MAD, they could ruin the world for everyone. But, there is no way for Russia to "win" in Russia vs the world.

 

[Polds4OSU]

If China is pulling away from them, I don't understand what they mean. "World war" implies two large fighting alliances. Russia taking on everyone isn't really a world war. Being that we still have MAD, they could ruin the world for everyone. But, there is no way for Russia to "win" in Russia vs the world.

right! its kind of of a hopeless spot it seems really. This goes on for too long I think you will see Russians rioting in the Streets to overthrow Putin. Putin can't beat the world on his own via military, his economy is in full on collapse , and his oligarchs will start bailing on supporting him when their portfolios start tanking for significant real world Value.

I really want to assume this is why Putin dusted off the Super Long Range Nuclear Missiles and started parading them around today in a rare move for them. I think Putin is really starting to get the pressure turned up on him....will be interesting to see his response.

basically the only thing he has to hope for is for Trump to win and then let him off the hook....if Trump doesn't win, I predict full on revolt in Russia after Putin can no longer hide the affects of the sanctions to the Russian People and their economy goes full meltdown.

 

[Polds4OSU]

direct from the Moscow Times

One of China's largest state-owned banks exits Moscow Exchange​

Bank of China, one of China's largest state-owned banks, has ceased cooperation with the Moscow Exchange after it was hit by US sanctions.

Source: The Moscow Times

Details: Previously, the subsidiary of the Chinese credit institution, Bank of China JSC, acted as a yuan clearing bank, ensuring that all transactions in Chinese currency were conducted on the stock exchange market.


Currently, ICBC Bank, China's second state-owned bank, clears transactions in yuan. Still, its operations may also be suspended: the US Treasury's license to conduct transactions with the sanctioned exchange is valid only until mid-August.

When it expires, Chinese banks will face sanctions, and exchange trading in yuan in Russia may halt.

Background:

・Direct payments in yuan are increasingly being frozen or delayed after the US expanded the criteria for imposing sanctions in June.

・The Shanghai-based subsidiary of VTB (Russian state-run bank) and small Chinese border banks, through which Russia and China were going to make payments without further delay, have restricted the conversion of rubles into yuan.

・On 24 June, the Russian subsidiary of the Bank of China suspended all transactions with Russian banks due to US sanctions.

 

[mugatu]

right! its kind of of a hopeless spot it seems really. This goes on for too long I think you will see Russians rioting in the Streets to overthrow Putin. Putin can't beat the world on his own via military, his economy is in full on collapse , and his oligarchs will start bailing on supporting him when their portfolios start tanking for significant real world Value.

I really want to assume this is why Putin dusted off the Super Long Range Nuclear Missiles and started parading them around today in a rare move for them. I think Putin is really starting to get the pressure turned up on him....will be interesting to see his response.

basically the only thing he has to hope for is for Trump to win and then let him off the hook....if Trump doesn't win, I predict full on revolt in Russia after Putin can no longer hide the affects of the sanctions to the Russian People and their economy goes full meltdown.

I don't think you'll see a full on people in the streets revolt... can't organize large enough scale in secret so everyone involved will be getting thrown in jail forever, or the organizers will fall out of windows during planning.

 

[GOGETUMPOKE]

China better start worrying about their own economy.

 

[Polds4OSU]

Russian apartment prices soar 172% as war and sanctions bite​

The prices of apartments in Russia's largest cities have increased by 172 percent over the past three years. The war in Ukraine and sanctions have directly impacted the Russian economy. "Elvira Nabiullina, president of the Russian central bank, is terrified," we read in The Economist.



"Decades of Soviet propaganda condemning credit as an unbearable burden have had an effect," notes the British economic weekly "The Economist." Russians have long been reluctant to take out mortgages, considering them a form of slavery. Therefore, Vladimir Putin has been fighting this perception since 2003, during his first presidential term. At that time, he argued that home loans could solve many citizens' problems.

The number of borrowers eventually increased, but the Kremlin received a bill for it. "State subsidies fueled a very hot real estate market, causing a sharp increase in home prices," it was noted.

Already after the outbreak of the COVID-19 pandemic, preferential loans with an interest rate of about 6 percent—2 percentage points less than the market offered—were introduced, with the state subsidizing the difference. Such loans could be obtained not only by families but also, for example, by employees moving to Siberia or the occupied territories of Ukraine.

Loans after the outbreak of war​

"The Economist" notes that despite the Kremlin's efforts, the number of loans issued shot up only after the invasion of Ukraine. In 2023, banks issued mortgages with a total value of 88 billion dollars, an increase of almost 50 percent compared to 2020.

Why such an increase? Russians have severely limited investment options due to sanctions imposed by the West. There is also the problem of "transferring money abroad." Additionally, inflation has hit Russia.

Paweł Jeżowski, a stock investor and analyst of the Russian economy, recently said on Patrycjusz Wyżga's program "Didaskalia" that real inflation in Russia could be as high as 30 percent. Officially, the Kremlin states that it is 8.59 percent.

The Central Bank of the Russian Federation raised reference rates a few months ago to 16 per cent. At the same time, the government maintained preferential lending conditions, raising them from 6 to 8 per cent. This created a significant difference between the government and market mortgage rates.



"As a result, the Kremlin is bearing high costs. The Ministry of Finance has already spent almost half a trillion rubles on this program," notes "The Economist." And costs may rise further, as rates are expected to be raised to 18 percent on July 26 at 2 p.m. Eastern Time.

According to estimates, real estate prices in the country's largest cities increased by 172 percent between 2020 and 2023. These figures terrify the head of the Russian central bank, Elvira Nabiullina, who blames government subsidies for "overheating the housing market."

 

[UrbanCowboy]

It doesn't exactly say it - but am I to infer the reason for the increase in real estate is from people moving their money to purchasing homes? That's the only explanation I can think of. Russia is in a population spiral - people aren't moving there in droves, so not sure why else home values would shoot up so much.

 

[Polds4OSU]

It doesn't exactly say it - but am I to infer the reason for the increase in real estate is from people moving their money to purchasing homes? That's the only explanation I can think of. Russia is in a population spiral - people aren't moving there in droves, so not sure why else home values would shoot up so much.

The story the Kremlin is giving doesn't make sense or match traditional market price factors


The Russian govt is saying the reason Apartment rent went up is because more people are buying homes via govt subsidized home loans

Which in theory would drive apartment prices down as vacant apartments flood the market as people move to homes

The most likely reason is that Russia is claiming they have 8.9% inflation right now ...... economist and outsiders say it closer to 30% inflation right now in reality

 

[UrbanCowboy]

The story the Kremlin is giving doesn't make sense or match traditional market price factors


The Russian govt is saying the reason Apartment rent went up is because more people are buying homes via govt subsidized home loans

Which in theory would drive apartment prices down as vacant apartments flood the market as people move to homes

The most likely reason is that Russia is claiming they have 8.9% inflation right now ...... economist and outsiders say it closer to 30% inflation right now in reality

Yes, but even with the subsidized loans, there aren't suddenly more people; if anything its the opposite. These folks buying houses were living somewhere before, which are now vacant. Can only play the shell game for so long before something gives.

I think you are correct in that the story the Kremlin is sharing is dog dodo.

 

[mugatu]

I think you are correct in that the story the Kremlin is sharing is dog dododo.

Hmmmm.... yep this checks out with their history of honesty. /s

 

[mugatu]

Top Russian economist dies after falling out of window

Several top Russian officials have plunged to their deaths from windows in recent years, including a top oil executive and a defense official.

www.newsweek.com

 

[cowboyinexile]

Top Russian economist dies after falling out of window

Several top Russian officials have plunged to their deaths from windows in recent years, including a top oil executive and a defense official.

www.newsweek.com

 

[mugatu]

They really should switchbto US hotel window designs... you know the ones that don't open beyond a few inches. Because they must have the most dangerous window designs. Haha

 

[Polds4OSU]

Russia's business elites signal they are tired of propping up the wartime economy​

• Some Russian elites are challenging the central bank's potential interest rate hike to 18%.
• Russia's key interest rate is at 16% after a series of hikes to tame elevated inflation and a hot wartime economy.
• However, critics argued that such high rates stifle lending and business activities.

Some of Russia's business elites appear to be getting impatient with the country's wartime economy.


Several influential individuals have come out to publicly challenge the Russian central bank's signal that it's likely to hike interest rates on Friday.

Russia's key interest rate already stands at 16%. Analysts polled by Reuters expected the central bank to hike it to 18% on Friday afternoon — the highest since April 2022, when it hit 20% amid economic turmoil following the invasion of Ukraine.

Igor Sechin, the CEO of Russian oil giant Rosneft, pointed to China's recent interest rate cuts, saying Russia should take cues from its neighbor, TASS, a state news agency, reported on Tuesday.

"We hope for similar steps for Russian prime borrowers from the Bank of Russia," said Sechin, according to a Reuters translation.

It wasn't the first time Sechin complained about high rates. Just last month, he griped that they are holding back borrowing and stifling business activities.


Now, he's also backed by Anatoly Aksakov, the head of Russia's lower house of parliament's banking committee.

"We need relatively cheap credit to come to the economy. We need structural change," said Aksakov, per Reuters. He added that price rises have slowed slightly and that annual inflation would decline in the second half of this year.

Russia's Center for Macroeconomic Analysis and Short-Term Forecasting, an influential think tank, even said the central bank is "forcing stagnation" onto the economy with high rates, per Reuters.

"Negative and systemic risks from such an action are likely to outweigh the positive effects," said Dmitry Belousov, the head of the think tank, referring to a potential rate hike.

Infighting with central bank governor​

Despite sweeping sanctions over its invasion of Ukraine in late February 2022, Russia's economy has avoided going bust and even appears resilient, as it's now being driven by wartime activities and services. Moscow has also pumped in subsidies for mortgages and businesses.

Russia posted 3.6% GDP growth last year, while unemployment rate hit a record low 2.6% in April as men continued heading to the front and amid a brain drain. This in turn drove up wages that contributed to price gains.


Russia's annual inflation rate remains high, at around 9.2%, amid a red-hot wartime economy that the country's central bank has been trying to cool.

The gripes over interest rates from Russia's elites show the infighting within the country's top echelons with Russian central bank governor Elvira Nabiullina taking several hits over the past year.

In August, one of Putin's aides slammed her for the weak ruble.

But Nabiullina has been at the helm of Russia's central bank for over a decade and is said to be trusted by President Vladimir Putin. She has so far managed to steady the economy and survive his high-level reshuffles.

Given that Russia's inflation rate is expected to remain high this and next year, monetary policy is likely to stay tight — indicating high rates — "until substantial disinflation takes hold," according to Allianz, a German financial services company.

Russia's central bank did not respond to a response for comment from Business Insider sent outside regular business hours. The central bank is also in its quiet period before its rate decision.

 

[Polds4OSU]

Russian central bank raises rates to curb wartime inflation​

Despite the Kremlin's optimistic forecast of 2.9% GDP growth in 2024, Russia's economic growth is expected to decline. Massive losses in the army and Russian draft dodgers have caused labor shortages in key sectors of the economy.

"Inflationary risks associated with sanctions have materialized," said Russia's Central Bank Governor Elvira Nabiullina at a July 26 press conference. She announced an increase in the interest rate from 16% to 18%.


According to Nabiullina, a "greater tightening of monetary policy" is needed to curb inflation, which is currently running at 8.6% year-on-year. She did not rule out further increases.

"Initial plans to start cutting rates in the second half of the year had to be abandoned as inflation showed signs of spinning out of control," Bartosz Sawicki, market analyst at Conotoxia fintech, told Newsweek.

"Instead, additional tightening of monetary policy had to be enacted in an effort to cool down the overheating wartime economy. Military spending, running at around 7% of GDP, has led to serious macroeconomic imbalances, which are beginning to take their toll."

Consumer price inflation has been rising for six consecutive months, putting the Central Bank's plan to reduce it to 4% at risk due to "international sanctions leading to higher cross-border payment costs and rising fuel prices."



"This can be partially attributed to refinery capacity outages caused by Ukrainian drone strikes," Sawicki said.

This follows an earlier decision by the Council of the European Union, announced on July 22, to extend sanctions against Russia for another six months.

 

[UrbanCowboy]

Russian central bank raises rates to curb wartime inflation​

Despite the Kremlin's optimistic forecast of 2.9% GDP growth in 2024, Russia's economic growth is expected to decline. Massive losses in the army and Russian draft dodgers have caused labor shortages in key sectors of the economy.

"Inflationary risks associated with sanctions have materialized," said Russia's Central Bank Governor Elvira Nabiullina at a July 26 press conference. She announced an increase in the interest rate from 16% to 18%.


According to Nabiullina, a "greater tightening of monetary policy" is needed to curb inflation, which is currently running at 8.6% year-on-year. She did not rule out further increases.

"Initial plans to start cutting rates in the second half of the year had to be abandoned as inflation showed signs of spinning out of control," Bartosz Sawicki, market analyst at Conotoxia fintech, told Newsweek.

"Instead, additional tightening of monetary policy had to be enacted in an effort to cool down the overheating wartime economy. Military spending, running at around 7% of GDP, has led to serious macroeconomic imbalances, which are beginning to take their toll."

Consumer price inflation has been rising for six consecutive months, putting the Central Bank's plan to reduce it to 4% at risk due to "international sanctions leading to higher cross-border payment costs and rising fuel prices."



"This can be partially attributed to refinery capacity outages caused by Ukrainian drone strikes," Sawicki said.

This follows an earlier decision by the Council of the European Union, announced on July 22, to extend sanctions against Russia for another six months.

Yikes - that's the double whammy that topples most governments. Inflation AND a shrinking GDP. Brutal.

 

[Polds4OSU]

Russia approves cryptocurrency for international trade amid sanctions pressure​

Russian lawmakers have approved a groundbreaking new law allowing the use of cryptocurrency for global transactions as the country continues to face intense financial pressure from Western sanctions.

On Tuesday, the State Duma, the lower house of the Russian Parliament, granted initial approval for the legislation.


This new law will enable businesses to conduct cross-border trade using cryptocurrencies, according to local media reports.

Anatoly Aksakov, head of the Duma, described the move as a historic decision in the financial sector during a speech to lawmakers on Tuesday, according to Reuters.

Payments are expected to commence before the end of 2024​

Escalating tensions between Russia and the US and its allies have led to extensive sanctions targeting individuals and entities in Russia in response to its invasion of Ukraine.

The US, European Union, and Britain have intensified their sanctions since the February 2022 invasion, focusing on President Vladimir Putin, Russia’s financial sector, and numerous oligarchs.


In response, Russia is legislating to allow international transactions via cryptocurrency for Russian firms.

Additionally, the Russian central bank will gain the authority to transfer funds abroad using private digital currencies.

Elvira Nabiullina, the governor of Russia’s central bank, announced on Tuesday that crypto-based payments are expected to commence before the end of 2024.

“We are already discussing the terms of the experiment with ministries, departments, and businesses, and we anticipate the first payments to occur before year-end,” she stated.

This shift represents a significant reversal from the central bank’s previous position.

In January 2022, the central bank proposed banning cryptocurrency transactions and mining, citing concerns over financial stability, citizen welfare, and monetary policy control.

Russia is also advancing plans for a digital ruble.


Nabiullina revealed that the central bank aims to transition from a pilot phase to full-scale implementation of the digital ruble by July 2025, according to Interfax.

Unlike decentralized cryptocurrencies like Bitcoin, Central Bank Digital Currencies (CBDCs) are government-issued digital tokens designed to mirror traditional fiat currencies.

Can cryptocurrency help evade sanctions?​

Russia’s move to embrace cryptocurrency will facilitate cross-border payments with countries and businesses otherwise restricted due to US sanctions.

Sanctioned countries have often turned to cryptocurrencies to bypass financial restrictions.

North Korea, for example, has been accused of using digital currencies to fund state programs and evade sanctions.


The Lazarus Group, a North Korean hacking organization, was reportedly responsible for a massive heist on the Ronin Network, stealing over $600 million in digital tokens.

Similarly, Iran has been reported to exploit digital currencies to circumvent international trade barriers.

However, proponents argue that cryptocurrencies offer transparency and security.

The blockchain technology underlying digital assets provides a public and immutable record of transactions, which can help deter illicit activities despite its potential misuse.

 

[Polds4OSU]

Countries banks pulling out of Russia a weekly thing now and Russia taking extra ordinary measures to try to replace the loss of banks with Crypto and digital Currencey

Russia Economy is in a VERY bad place right now



Austria's Raiffeisen Bank to ‘Drastically’ Reduce Operations in Russia

Austria’s Raiffeisen Bank said Tuesday that it will continue to scale back its Russian business as it navigates a “very difficult” exit from the country, where it generated half of its post-tax profit in 2024 so far.

In its semi-annual earnings report, Raiffeisen Bank International said its Russian division posted 705 million euros ($763.6 million) of the global unit’s consolidated profit of 1.32 billion euros ($1.4 billion) in January-June.


RBI Groupannounced plans last year to sell or “spin off” its Russian subsidiary amid pressure from the European Central Bank and the U.S. Treasury Department. However, it has faced difficulties finding local buyers.

In its latest report, RBI said it reduced its loan business in Russia by 60%, “considerably” reduced its clearing, settlement and payment services business, and is “taking steps” to further reduce customer deposits.

“RBI will drastically reduce Raiffeisenbank Russia’s business even further in conformity with ECB requirements. Initial consequences for customers, such as restrictions in payments, have already taken effect. Additional steps will follow,” the bank said.

In addition, the banking group said it faces hurdles such as “numerous approvals from various Russian and European authorities, and from the respective central banks” for its sale or spinoff plans.


“The process is therefore not entirely in RBI’s own hands. It is therefore very difficult to make a realistic forecast on when RBI will complete the deconsolidation of its Russian bank,” RBI Group said.

Campaigners have previously accused Raiffeisen of only paying lip service to its intention to quit the Russian market as it has seen its profits soar since Moscow’s full-scale invasion of Ukraine.

Raiffeisen was the largest foreign bank operating in Russia and had spent years building up its Russian operations before the invasion. It specialized in servicing European companies, their foreign workers and other high-end international clients, but had started aggressively building up its portfolio of Russian domestic business clients in the years before the war.