Central Bank clarifies Putin's new decree on currency restrictions

Banks may not fulfill obligations in foreign currency to legal entities and individual entrepreneurs if the funds appeared on customer accounts after August 8,explained the Central Bank

Russian banks may suspend their obligations to customers in foreign currency if the funds were received on the account after August 8, 2022. At the same time, the rule applies only to legal entities and individual entrepreneurs (IP). This was reported to RBC in the press service of the Bank of Russia, commenting on the significance of the new decree on temporary restrictions on foreign exchange transactions, which Russian President Vladimir Putin signed a day earlier.

“That is, operations with “new” money can be suspended. And only in those banks that will fall under sanctions after the entry into force of the decree, ”the press service of the Central Bank explained. They added that the introduction of such measures is aimed at stimulating businesses "not to keep money in banks in the so-called toxic currencies, not to accumulate foreign currency balances on accounts." Due to the blocking of correspondent accounts and the freezing of cash balances on them, banks cannot fulfill their obligations to customers in the currency that is frozen, the regulator explained.

According to the representative of the Central Bank, banks are already making efforts to ensure that legal entities and individual entrepreneurs transfer funds in the currencies of unfriendly countries into rubles or into friendly currencies, and the decree creates additional incentives for this. “If a company or individual entrepreneur decides to keep money in toxic currencies, then such clients will share with the bank the risk of freezing funds,” the regulator’s press service emphasized.

What other measures does the new decree introduce:

www. In the event of sanctions being imposed, companies can open special D-type accounts to fulfill obligations to non-residents on Eurobonds.

Holders of Russian Eurobonds will receive payments to D-type accounts Investments

The Central Bank received the authority to determine the maximum value of the commission of banks for currency transfers in the event of the imposition of sanctions against them. The Central Bank will be able to set premiums for risk ratios, taking into account the issuer of the currency. The premiums on such credits and loans will be differentiated depending on the sufficiency of the borrower's foreign currency earnings to fulfill his obligations. Individuals (individual entrepreneurs, including those involved in foreign economic activity, are individuals, not legal entities) will not be subject to a limit on the amount of money transfers of no more than $5,000 per day. Thus, individual entrepreneurs will be able to transfer foreign exchange earnings received from non-residents under foreign trade agreements to their accounts in foreign banks without observing such daily limits. Pro Car dealers will have to cut staff. Who is the first in the risk zone Forecasts Pro Left the company - it means a traitor:

Putin allowed banks not to work in the currency of countries that froze their assets

Western countries have imposed large-scale sanctions against the Russian financial system after the start of a special operation in Ukraine. In particular, the EU and the US banned the import of cash euros and dollars into Russia, and foreign banks began to close correspondent accounts for Russian credit institutions, regardless of whether they are under sanctions or not. Sberbank, VTB, Alfa-Bank, Promsvyazbank, Otkritie, Sovcombank, Novikombank, Rossiya Bank, SMP-Bank, Transcapitalbank, Investtorgbank, Moscow Industrial Bank and Far Eastern Bank are under the most stringent US blocking sanctions (SDN list) . Their assets and property are blocked, and for cooperation with them, companies may fall under secondary sanctions.

The Central Bank sees the risks of imposing sanctions on the National Clearing Center (NCC, part of the Moscow Exchange group) - its accounts take into account the currency used by Russian residents. If NCC and Moscow Exchange fall under Western sanctions, then foreign exchange trading will be paralyzed. In July, Forbes reported that the Central Bank began discussing with market participants the possibility of creating an analogue of Bloomberg - a platform where the currency quotes of the largest banks will flock to understand the ruble exchange rate against foreign currencies.

The Central Bank will complicate the issuance of loans to businesses in "toxic" currencies

In early August, the Central Bank released a report "Financial Market: New Challenges in Modern Conditions", in which it proposed the government to issue directives for the transfer of savings of real sector companies from the currencies of unfriendly countries to other currencies. The Ministry of Finance, however, believes that so far a directive decision on this issue is not required.