10 May 2022 · 2 min read

Putin Bids to Create New International Settlements Platform, Reform Foreign Currency Rules

Vladimir Putin. Source: a video screenshot, CNBC Television / YouTube

 

Russian President Vladimir Putin has spoken of plans to revamp the country’s international settlements ecosystem – in a bid to prevent Moscow from sliding into an economic quagmire at the hand of Western-led sanctions.

The nation has been all but frozen out of international trade and the global economic system following the start of the war in Ukraine. But Moscow has responded with a set of countermeasures. 

Per the state-run news outlet Tass, Putin has created a working group that has been charged with “creating a new mechanism for international payments.” The group will be headed by a key Putin aide, Maxim Oreshkin, and will also launch new currency regulation-related measures, aimed at fighting back against the international community’s efforts to drag the fiat ruble into the abyss.

The group also comprises a number of key government and economic figures, such as the head of the Central Bank, Elvira Nabiullina, the heads of the finance and economic development ministries, as well as the head of Russia’s financial regulator, and the chairs of the Federal Tax Service and the Federal Customs Service.

The working group has been given the authority to implement state policy on currency regulation and international settlements, and has been ordered to create the infrastructure required to carry out settlements “between Russia and partners from friendly countries. The platform will do away with currencies such as the USD and the euro, and instead require the use of “Russian rubles or the national currencies” of “friendly states.”

The body will create a new protocol system for settlements with international partners and “resolve issues pertaining to conducting trade finance operations” – as well as create a new system for payment clearing.

The body will also create a parallel system for the 50-or-so nations the Kremlin has placed on a list of “unfriendly countries.” Should these countries wish to trade with Russia, they will be forced to pay in rubles, rather than having the choice to pay using their own national fiats.

Although the group will have executive power, it has been instructed to seek approval from Putin for all major proposals.

The working group has also been told to “develop measures” pertaining to foreign exchange regulation “in order to ensure a balance of supply and demand in transactions” in the currency markets. And the group has been told to “work on a number of other” financial issues, including those pertaining to international sanctions and the freezing or seizure of Russian state assets held overseas.

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