Izvestia: Top Russian, Chinese banks move away from the dollar

Moscow and Beijing have concluded an intergovernmental agreement on switching to settlements in national currencies as part of the de-dollarization campaign announced almost a year ago, Izvestia wrote. VTB and China Merchants Bank will be authorized to carry out settlements, three sources close to the Central Bank told the newspaper.

Chairman of the State Duma Committee on Financial Market Anatoly Aksakov told Izvestia that creating “gateways” between the Russian and Chinese counterparts of SWIFT could become one of the mechanisms for mutual settlements in national currencies.

Aksakov told the newspaper that in order to increase the volume of settlements in national currencies, it will be necessary to form a market for ruble and yuan financial instruments. This will insure against fluctuation risks in the exchange rate on key goods in Russian-Chinese trade. According to him, in the coming years, the share of settlements with China in rubles can increase from the current 10% to 50%.

VTB told the newspaper that the credit institution is the only Russian organization that has a financial license in China. In addition, the bank has correspondent accounts in rubles and yuan, and is also actively promoting the use of Russian and Chinese currencies in foreign trade.

A source familiar with the negotiations told Izvestia that a mechanism for mutual settlements is planned to be set up by 2020. Initially, major state-backed companies will switch to payments in rubles and yuan. The source added that settlements in national currencies would also be carried out on contracts that were originally concluded in US dollars.