The situation with international money transfers in modern conditions can be described by four proverbs and sayings, Mikhail Kovrigin, DIRECTOR of the department for organizing international settlements of the Bank of Russia, said at the congress of the Association of Russian Banks.
“The first is “what to talk about, what cannot be turned back.” There is a request from banks, from business, they often ask us how we can pay in dollars, in euros, it is very expensive, difficult. We must understand that our main message is that the situation, the world has changed. Therefore, settlements with friendly countries in national currencies are exactly the direction that is actually the main one, ”said Kovrigin.
The second proverb mentioned by the HEAD of the Central Bank department - “where in a hop, where in a flight, where sideways, and where on a crawl” - means that now the mechanism of international settlements is individual for each direction and depends on several parameters, including jurisdiction, and on how banks, exporters and importers work in this direction. According to him, over the past year, business has “trodden different paths in a good way” to financial and trade partners. “If a year ago the issue of organizing settlements was acute in the sense that all businessmen were on the same side of the barricades and asked: “How to do it?” Now we are seeing healthy competition in a number of areas. In fact, banks are starting to push each other a little and compete,” Kovrigin described. He added,
“Great opportunities come to everyone, but many do not even know that they have met with them,” Kovrigin cited another proverb. According to him, competences in organizing foreign settlements have become a competitive advantage, although they were previously taken for granted. “Given how the sanctions contours are expanding in our country, it is clear that the competitive field looks quite new. And there are many opportunities. What is needed for this is the fourth proverb: “I always take the burden on my own, so as not to groan when walking,” he noted.
Kovrigin cited as an example the appeals of small banks that complain to the Central Bank that they sent information to 50 foreign correspondent banks that they would like to cooperate with them, but no one answered. “In order to enter the market of international relations, one must be prepared for this. There must be competence both in terms of technology, and in terms of understanding how the counterparty works, and in terms of having people with foreign languages, ”he said, adding that this is an expensive line of business that needs to be invested in.
Russian banks have had difficulty making cross-border transfers in 2022 after the imposition of massive sanctions by Western countries on the Russian financial system due to Russia's special military operation in Ukraine and the sanctions that followed. First, the implementation of transactions complicates the disconnection of a number of credit institutions from the international financial messaging system SWIFT. Now ten Russian banks are disconnected from it: Sberbank, VTB, Otkritie, Rosselkhozbank, Novikombank, Promsvyazbank, Rossiya, Sovcombank, VEB.RF state corporation and MKB.
Read pioneerprodukt.by How the CEO of Adidas turned the company into an outsider - The Economist Riot on the ship: is it necessary to fire striking employees They got loans and get divorced: how to share the total debts of a family business6 non-standard recruiter questionsSecondly, regardless of SWIFT, transfers in dollars or euros become unavailable to sanctioned banks. Thirdly, since the spring of 2022, foreign credit institutions have begun to turn off correspondent accounts for Russian banks, regardless of whether they are on the sanctions lists, or have stepped up verification of transfers from Russia. As a result, large banks under sanctions were forced to either completely curtail the direction of international transfers, or set up alternative ways to conduct them. For example, Sberbank now conducts cross-border transfers only in Russian rubles to 10 neighboring countries, its representative told RBC. The second largest bank, VTB, for example, was able to set up yuan transfers without using SWIFT.
The organization of international settlements is now being built through four channels, follows from Kovrigin's presentation:
correspondent relations between credit institutions with a focus on settlements in national currencies. Kovrigin stressed that this scheme still remains the main one for organizing international payments. systems for the transmission of financial information, which are analogous to the international SWIFT system. As the director of the Central Bank Department noted, banks do not have to rely on the Financial Message Transmission System from the Central Bank, they can use other channels. subsidiary banks and branches of credit institutions. “I always recommend that you carefully look at which subsidiary banks and subsidiaries work with us, because if there is a subsidiary bank of a country, then, as a rule, there is some kind of correspondent account. [...] This is, at least, the first address where one could apply,” explained Kovrigin.