Russia will pay interest on its debt by bypassing US sanctions. that’s how
Russia's finance minister said Moscow is planning a new foreign bond payment system similar to the rubles-per-gas system, in an effort to avoid a historic sovereign default after Washington ended a major exemption. sanctions that increased Russia's chances of default on its debt.
Anton Siluanov, the Russian finance minister, was quoted by Vedomosti on May 30 as saying that the new system in the pipeline would substantially mirror the one already in place which allows foreign buyers of Russian natural gas to settle transactions without incurring sanctions.
In March, Russian President Vladimir Putin said Moscow would require "hostile" countries to pay for natural gas in rubles by opening several accounts with Gazprombank, and then making payments in euros or dollars, which the Russian settlement infrastructure converts to the Russian currency.
Siluanov told Vedomosti that the new bond settlement system would work in much the same way, but "in reverse" and in a way that bypasses Western payment infrastructures.
Under the proposed new scheme, investors would have to open a foreign currency and a ruble account with a Russian bank. Russia would then make the bond payments in rubles, which would be converted into foreign currency through the Russian settlement infrastructure – the National Settlement Depository (NSD) – and transferred to the foreign currency account that bondholders can access. There remains only a doubt related to the possibility of transferring these dollars where depositors wish, but if the account were defined
“Now we are finalizing this mechanism, we will discuss it with the government. After that, we will make an offer to our investors, ”said Siluanov, according to the outlet.
Siluanov told Russia-24 television on Friday that the new bond payment system will be in place for the next coupon payment of the bonds maturing on June 23-24.
The US has tried to send Russia into forced default by canceling the bond payment exemption granted to the Russian Central Bank in the total ban from the international payments system. But what if the same mechanism is set in motion by a naturally exempt bank like Gazprombank?
Russia has about $ 2 billion in foreign currency bond payments to be made by the end of the year, and experts predict that some of these will be impossible to pay without the US waiver. However, the default would only be symbolic because, at this moment, Russia does not need to access the debt market which is in any case closed to it.
"We expect the impact on the United States and the global economy to be minimal, as Russia has already been financially isolated," White House spokeswoman Karine Jean-Pierre said during a press briefing on May 26.
With the proposed solution, Russia will pay its debt in Rubles, which will then become dollars, but it could be a problem to take them out
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The article Russia will pay interest on its debt by circumventing US sanctions. Here's how it comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-russia-paghera-gli-interessi-sul-proprio-debito-aggirando-le-sanzioni-usa-ecco-come/ on Tue, 31 May 2022 12:00:15 +0000.