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Samson:  Russia announces 70 banks joining a new financial system away from “SWIFT”

1st July, 2022

The Russian Central Bank announced that 70 foreign banks from 12 countries have joined the alternative Russian trading system for the global “Swift” network. 

The President of the Bank, Elvira Nabiullina, said that the Russian Central Bank will not disclose the list of these banks due to the fear of these banks that they will be affected by Western sanctions, for their dealings with the Russian financial system in light of the continued imposition of more sanctions by the European Union and the United States of America

She noted that “the Central Bank of the Russian Federation adheres to the policy of floating the ruble exchange rate even in changing conditions, and attempts to achieve the exchange rate that was before will make it artificial.” “The managed exchange rate of the ruble will lead to a decrease in the independence of the monetary policy of the Russian Federation,” she added

She stated, “When we begin to manage the exchange rate, of course, the independence of monetary policy sharply decreases, that is, we are tied to the currencies of foreign countries. We are forced, with the regulated exchange rate, to synchronize monetary policy with the policies of countries linked to their currencies.” She stressed that the share of the Chinese yuan in the Russian economy is increasing

She pointed out that the Russian system for exchanging messages between banks “SBFS” is able to work as an alternative to the global “SWIFT” system. “We have also developed the internal financial infrastructure, and it will work smoothly, we have an SPFS dispatch system that can replace SWIFT within the country, and external participants can connect to it,” she added

When was the alternative Russian network for “Swift” created?

Russia created SPFS in 2014, when the United States threatened to expel Russia from SWIFT through sanctions. This system is an acronym for Financial Message Transfer System, and it drafts and processes standard formats for electronic banking messages or UFEBS documents and MT files as well

SPFS has integrated security measures that slow down its transactions and increase its financial costs as well. The regime carried out its first successful transaction in 2017, and now has more than 400 financial institutions in its network, and Russia is seeking to include its allies in this system. 

According to the Russian Central Bank, 20 percent of domestic transfers are currently made through SPFS, but message volume is limited and operations are limited to weekday hours

SWIFT is an acronym for Association for Global Interbank Financial Telecommunication, a company based in Brussels, and therefore subject to Belgian and European law. Founded in 1973, the company is one of the largest banking and financial correspondent networks, providing bank settlements between financial institutions around the world

A few days ago, the 27 European Union countries agreed at a summit in Brussels to exclude Sberbank, the largest bank in Russia, from the SWIFT system for international money transfers. This came as part of a sixth package of European sanctions against Moscow over its military operation in Ukraine

The Russian financial sector is facing difficult conditions

As part of her statements, the head of the Russian Central Bank revealed that the financial infrastructure of her country is working without malfunctions. She pointed out that the Russian system for exchanging messages between banks “SBFS” is able to work as an alternative to the global “SWIFT” system. 

But she reiterated that the Russian financial system and economy are facing a difficult situation, and the Central Bank will use any necessary solutions in this situation. “Our financial system and economy are now facing a very difficult situation, and the Bank of Russia will be very flexible in its approach to using any necessary tools,” she added

This comes as Western pressures and calls are growing to stop Russia’s use of the “SWIFT” system, a global messaging system between banks to facilitate transfers and payments. Western countries have adopted a new package of sanctions against Russia in response to the war on Ukraine, including the exclusion of a number of Russian banks from the international banking system “SWIFT”. The move is expected to further isolate Russia from the international financial system

Freezing assets worth $330 billion

In the context of Western sanctions, the United States of America and its allies have announced the freezing of Russian assets worth $330 billion since the start of the Russian-Ukrainian war. According to the US Treasury, Western allies have frozen $30 billion in assets owned by Russian wealthy or elites who are subject to sanctions

They also froze about $300 billion from the Russian Central Bank, according to a statement issued by the Western Allies’ Action Unit responsible for tracking the assets of Russian elites. Also, at least five luxury yachts and real estate owned or controlled by Russian nationals were seized and sanctioned

Earlier, Russian Finance Minister Anton Siluanov announced that the volume of gold and foreign exchange reserves of the Russian Central Bank, which was frozen due to Western sanctions, is about 300 billion dollars. He said, “That’s about half of the reserves that we had.

We have total reserves of about 640 billion dollars, and about 300 billion of them are now in a state where we can’t use them

. He stressed that Russia will not abandon its sovereign debt obligations, but will pay them in rubles until Western countries reverse the freezing of their gold and foreign exchange reserves, noting that this is a “completely fair” matter in the current circumstances

He noted that the West is pressuring China to limit Russia’s access to its yuan reserves, expressing his belief that “our partnership with China will continue to allow us not only to maintain the cooperation that we have achieved, but also to develop it in conditions in which Western markets are closed (in front of us).”

He stressed that Russia has enough funds to guarantee the production of goods and conduct the necessary financial transactions, warning that sanctions against Russia will rebound later on those who impose them  LINK

Samson:  Putin issues a decree to seize foreign energy companies in Russia.. This condition was imposed on them, and he gave them a month

1st July, 2022

On Friday, July 1, 2022, Russian President Vladimir Putin issued a decree allowing full control of foreign energy projects in Russia, including a project owned by British and Japanese companies.

According to the decree, Moscow can create a new company that will take ownership of the “Sakhalin 2” project, which is owned by 50% of the British “Shell”, “Mitsui” and the Japanese “Mitsubishi”. This step comes as the region suffers from an energy supply crisis due to the Russian attack on Ukraine four months ago.

Moscow attributed the reason for issuing this decree to what it described as “threats to Russia’s national interests and economic security.” The presidential decree gives foreign companies a “month” to decide whether they want to keep the same shares in the new company.

Japan was aware of Putin’s decree

It is noteworthy that the British “Shell” company owns 27.5% of the shares of the “Sakhalin 2” project, while the Japanese companies “Mitsui” and “Mitsubishi” own 12.5% and 10%, respectively, which in the end constitutes 50% of the ownership of the project. On the other hand, Shell responded in a statement, Friday, to Putin’s decision that it was “studying the repercussions of the decree,” noting that it “always worked in the best interests of the project,” according to the Associated Press.

For his part, Japanese Deputy Prime Minister Seiji Kihara told reporters Friday that his country’s government was aware of Putin’s decree and is currently studying its effects.

Kihara emphasized that the project should not be undermined because it is “closely related to Japan’s energy security,” adding that anything that harms the rights of his country’s resources is “unacceptable,” according to the agency.

The Sakhalin 2 project includes three offshore platforms, an onshore processing facility, 300 km of offshore pipelines, 1,600 km of onshore pipelines, an oil export terminal and a liquefied natural gas plant.  LINK