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     Sanctions have complicated many aspects of using foreign currency in Russia. With the exception of Gazprombank, all large Russian-owned banks remain on the US sanctions list, which in itself is sufficient to make operating in Western currencies practically impossible for most of the banking sector. In addition, ten large Russian banks and four Belarussian bank have been denied access to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system for transmitting international payments. Sanctions do not apply to all banks in Russia, however. For example, a number of foreign-owned banks such as the Austrian Raiffeisen Bank and the Italian Unicredit Bank still operate in Russia.
The impacts of sanctions on the financial sector can be seen in the dramatic shift in currency allocations. Traditionally, a significant share of both corporate loans and corporate deposits were denominated in foreign currencies. The share of forex loans had been declining before February 2022, but post-invasion firms rushed to pay off dollar- and euro-denominated loans to convert their debt to rubles. The overall share of forex loans in the total bank lending stock has fallen to just over 10 %.
Because the use of Western currencies carries significant sanction risks, the use of such currencies as an invoicing currency in foreign trade transactions has collapsed. At the end of 2021, 85 % of exports and 68 % of imports were invoiced in dollars or euros. At the end of last, those shares were just 32 % for exports and 34 % for imports. While the ruble’s share has increased slightly, use of the Chinese yuan has climbed from zero to around 30 %. Foreign payments are increasingly transmitted by Russia’s SPFS (System for Transfer of Financial Messages) and the Chinese CIPS (Cross-border Interbank Payment System). The use of cryptocurrencies in foreign payments is also reported.
China’s foreign currency regulations and Chinese banks’ fear of secondary sanctions has reduced the attraction of providing yuan-denominated financing to the Russian market. A number of banks have granted their corporate clients yuan loans, but these are largely financed with domestic deposits. For this reason, yuan loans only comprise a small slice of the loan stock and play only a minor role in corporate bond issues. The yuan’s importance, however, has grown considerably in forex markets. In the first months of this year, about half of the Moscow Exchange’s forex trade involved ruble-yuan pairings. The yuan market does not offer the same opportunities for dispersion of risk like dollar- or euro-based markets, so excess or lack of yuan liquidity occasionally causes problems.
 2.4 Telegram dominates war coverage and commentary In the more than two years since Russia began its full-scale invasion of
Ukraine, no platform has expanded its role in helping the outside world to
  14 RUSSIA Country Report July 2024 www.intellinews.com
 



























































































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