Page 79 - RusRPTOct23

"We are trying to introduce our financial messaging system, the SPFS, our Chinese colleagues have their own system, other BRICS countries also either have their systems or are creating them. This is why this issue is to be discussed by money authorities and financial agencies of BRICS member states, and next year it will be one of the issues on the agenda of this organization’s meeting," he said.
The government appears to be gradually preparing to introduce new capital controls. In the middile of September, the Ministry of Finance announced the need to introduce controls over transfers of rubles abroad. Now Economy Minister Maxim Reshetnikov has proposed using the “Chinese membrane” model to stabilize the ruble exchange rate, which will ultimately mean restrictions on the withdrawal of rubles from Russia. The Central Bank and most analysts are categorically against it.
The problem of high volatility of the ruble cannot be solved only through the key rate, mandatory return of proceeds by exporters and other standard currency control measures, head of the Ministry of Economic Development Maxim Reshetnikov said today. The ruble exchange rate, according to the minister, can be stabilized using “an analogue of the Chinese model,” in which “there is a kind of ‘membrane’ between the domestic ruble market and the external ruble market.” The Ministry of Economic Development is discussing its idea with the Central Bank, Reshetnikov added.
In China, there are now two yuan exchange rates - offshore and onshore. In the first case, at auctions in Hong Kong, Malaysia, Singapore and others, a purely market rate is established, and in the second, the Central Bank sets a daily reference rate, from which the yuan can fluctuate within 2%. The entry of offshore yuan into China is limited for both individuals and companies.
From Reshetnikov’s explanations, which we recounted in detail here, it is not clear how exactly the “Chinese membrane” will operate in Russia. The minister only emphasized that we are by no means talking about two ruble exchange rates.
In China, the “membrane” refers to the need to report on significant transactions abroad, economist Alexander Isakov explained to RBC. It is necessary to obtain approval for financial account transactions (for example, outward direct investments in foreign assets), which requires the provision of documents confirming the legality of receiving funds and plans for their use. In addition, for individuals in China there is a limit on withdrawal of funds - $50 thousand per year for citizens and about $500 thousand for companies.
Analysts interviewed by RBC believe that the “membrane” may mean restrictions on the withdrawal of funds abroad or the purchase of foreign assets. These measures could lead to the division of markets into external and internal, with more stringent restrictions on the latter. For individuals in Russia,
79 RUSSIA Country Report October 2023 www.intellinews.com