Page 19 - bne IntelliNews Russia OUTLOOK 2025

yuan soaring to 99.8%. Before the war, more than 80% of transactions were conducted in dollars, with euros making up the remainder.
Since the US sanctioned MOEX, Russian companies have found it increasingly difficult to make international payments as well, causing liquidity problems, increasing the length of time needed to make or receive international payments and driving up transactional costs significantly.
The strangulation sanctions are driving innovation and at the recent BRICS summit in Kazan in Russia all the members discussed setting up a BRICS Pay cryptocurrency that can be used to settle mutual trade deals independent of the dollar. Russia and China have also proposed abandoning money altogether and returning to barter trade as a way of avoiding the financial sanctions.
Gazprombank sanctions
The Biden administration announced sanctions on Gazprombank, along with 50 internationally connected Russian banks, more than 40 Russian securities registrars and 15 Russian finance officials, which handles Europe’s payments for Russian gas, on November 21, as part of a fresh wave of restrictions on Russia’s finance sector.
While Gazprombank had long been on the Biden administration’s radar, it had previously avoided targeting the bank, primarily because of its critical role in facilitating payments for Russian gas supplies to Europe. Under a March 2022 decree, the Kremlin stated that buyers of Russian gas supplies from what it calls “unfriendly countries” would need to make payments for those supplies into special accounts in their name at Gazprombank. Those foreign currency payments had to be deposited into one account and then converted into rubles and transferred to another, before being sent to Gazprom.
In a statement, US Treasury Secretary Janet Yellen said the sanctions would “further diminish and degrade Russia’s war machine. This sweeping action will make it harder for the Kremlin to evade US sanctions and fund and equip its military.”
Russia responded on December 5 by amending its March 2022 decree. Now, buyers of gas supplies to “unfriendly countries” can pay for them using intermediary Russian banks, which will convert them into rubles for onward transfer to Gazprombank, which remains the sole authorised bank to handle payments for gas.
Nearly all major Russian banks are already sanctioned, but unlike Gazprombank, OFAC has already issued licences allowing continued dealings with some of them where energy payments are concerned.
19 Russia OUTLOOK 2025 www.intellinews.com