Russia has been using the Chinese yuan to avoid sanctions, but at least one major Chinese bank has restricted transfers from Russia over fears of secondary sanctions from the West.
Bank of China, a major Chinese bank, has begun restricting yuan transactions between Russian clients to the EU, US, UK and Switzerland since June 13, RBC TV channel and Frank Media, a Russian media outlet focused on finance and economics, reported.
Restrictions affect money transfers involving the Bank of China as an agent or intermediary (a bank transferring money from Russia to third-party countries).
“The decision was not made by China, but by the EU and the US, specifically how they tried to increase the pressure on sanctions by choking off alternative channels in the form of yuan,” said Pavel Semyonov, chairman of the board of directors of Russian bank Modulbank.
According to Mr. Semyonov, Russian clients can still make yuan transfers within the Chinese bank network.
The reason why Chinese banks are taking this measure is due to concerns about secondary sanctions or other restrictions, said Dmitry Lesnov, head of customer service development at Russian bank Finam.
China became one of the main importers of Russian oil after the Russia-Ukraine conflict broke out in February 2022. The Asian country used yuan for almost all of its oil purchases from Russia over the past year. Photo: CNN
The Chinese bank's decision comes as the Russian economy becomes more dependent on the yuan due to sanctions related to the conflict with Ukraine, including the banning of some Russian banks from the SWIFT international payment system.
According to Bloomberg, the Chinese yuan surpassed the US dollar to become the most traded currency in Russia in February and March, largely used for trade between Russia and China.
In May, Reuters reported that China used yuan for nearly all of the Russian oil it bought over the past year.
Finam Bank confirmed that it had received notice of Chinese banks' restrictions on yuan transactions.
“The restrictions have a negligible impact on our bank, as only a small part of yuan payments here are routed through Chinese banks,” said Andrey Shulga, chairman of Finam Bank.
Mr Shulga also added that his bank had found alternatives to the affected payments.
Meanwhile, Mr. Semyonov said that Russian yuan transfers to the US and EU at Modulbank only accounted for 3% of total transfers in this currency.
According to experts, money transfers to Western countries through Chinese banks may have been used by Russian companies to circumvent sanctions against Russia .
Nguyen Tuyet (According to Business Insider, Novaya Gazeta, meduza.io)
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