European countries have had to pay for gas deliveries from Russia in rubles for around three months. Conversely, President Putin also orders this solution for the settlement of Russian debts.
Russia wants to temporarily allow the repayment of some foreign debts in rubles in view of the sanctions pressure on its own financial system.
According to a decree signed by Kremlin chief Vladimir Putin on Wednesday, obligations to holders of Russian eurobonds will be deemed to have been made even if they are settled in rubles.
He instructed the Russian government to clarify technical details within the next ten days and to determine banks through which the payments can be processed in the future. Foreign creditors would then have to open an account with these banks, which can later convert rubles into foreign currencies.
The background to the decision are the far-reaching sanctions, including against the Russian banking system, which Western countries imposed in response to Russia’s war against Ukraine. The sanctions effectively exclude Russia and its banks from the financial system, which is dominated by Western states. In addition, a significant part of Russia’s financial reserves stored abroad is blocked by sanctions. These restrictions make it almost impossible for Russia to pay its creditors abroad – even though the financial means are actually there.
Since April, European countries have had to pay for Russian gas supplies in rubles by order of Putin. To do this, western gas buyers have to open an account with Russia’s state-owned Gazprombank and deposit euros there. Gazprombank then settles the amount in rubles and pays it to Gazprom.
At the end of May, Russia’s Finance Minister Anton Siluanov then proposed a corresponding concept for paying off foreign debts – only the other way around: Russia deposits rubles into the bank, which converts them into euros or dollars, and the bondholders then receive foreign currency. According to Siluanow, this should primarily serve to circumvent western payment systems.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
