Russian companies are scrambling to open accounts with a Chinese state bank in Moscow as a way to escape international sanctions imposed following Russia’s invasion of Ukraine.
As Reuters reported on Thursday (March 3), a source at the bank revealed that between 200 and 300 companies had approached the bank to open new accounts in the week since the Russian assault on its neighbor that has prompted an unprecedented response from the international community.
The report notes that it’s unclear how wide-ranging demand was among Russian businesses for new accounts at Chinese banks, although the source said many of the companies in question already do business in China and he expected yuan transactions to increase among these firms.
The sanctions, imposed by the US and a number of its allies, have deeply hurt Russia’s economy in a matter of days, causing the currency to plummet to the point where on Russian ruble was worth less than one U.S. penny, reported PYMNTS.
Interest rates have also climbed rapidly, and a growing list of international companies have also vowed to stop doing business in Russia. In addition, seven of the country’s largest banks were blocked from accessing the crucial SWIFT international messaging system. Perhaps most significantly, sanctions were also placed on all assets of Russia’s Central Bank held abroad, greatly limiting Russia’s ability to access even its own resources.
On Wednesday, Cuo Shuqing, the head of the China’s banking and insurance regulator, said the country “will not participate in such sanctions, and we will continue to maintain normal economic, trade and financial exchanges with relevant parties.”
Reuters added that several Chinese state banks have operations in Moscow, among them Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank. The latter of these declined to comment, while the other three did not respond to requests, Reuters said.
Reuters’ report also quoted a Chinese businessman with long-standing ties to Russia who says a number of Russian firms he works with plan to open yuan accounts.
“It’s pretty simple logic,” said the businessman, who asked not to be named. “If you cannot use US dollars, or euros, and the US and Europe stop selling you many products, you have no other options but to turn to China. The trend is inevitable.”
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