Navigate through the site with the top menu, or see some recent posts below. If you like GIH, visit some of our sponsors.
Global Intel Hub
wo to three years would be enough time for Russia to switch to international settlements to the ruble, Andrey Kostin, head of Russia’s second-biggest bank VTB, said.
“Two to three years is enough, not only to launch [settlements in rubles], but also to complete these mechanisms. But much will depend on how banks will cope with the task,” Kostin said in an interview with Izvestia newspaper.
Kostin first put forward the idea of switching to national currencies in international settlements about a decade ago, which means a move to the ruble shouldn’t be considered a counter-sanction measure.
"I did not find understanding in this matter with the previous leadership of the Central Bank [10 years ago ] They believed that since the [US] dollar works, we shouldn’t do anything, and settlements in rubles will just bring additional risks. Under the new leadership the position of the Central Bank changed. I think that soon we will achieve a major breakthrough,” Kostin said.
Creating a national payment system and establishing a domestic rating agency are among other priorities for the bank, the VTB head added.
The media has reported on the possibility of the US and EU widening sanctions to exclude Russia from the SWIFT global money transfer system.
Kostin said the move would become “a point of no return” and that any further dialogue would be impossible if SWIFT was cut off.
“If you look at Iran’s experience, shutting down SWIFT only happens when all relations; political, economic, cultural, even diplomatic, break down,” the VTB boss said.
“I don’t know how [Western] banks could block SWIFT and then expect cooperation in the fight against terrorism and nuclear disarmament.”However, replacing SWIFT within Russia won’t be difficult, Kostin said.
“We have a [similar] system at the Central Bank of Russia and others. The Central Bank has tested this system, and we can switch to it at any moment.”He said that domestic payments account for about 90 percent of VTB settlements and won’t be affected. Across the entire Russian banking system the share of domestic payments is even higher, Kostin explained.
Posted: October 1, 2014, 12:16 am
Just days after Ukraine began discussing capital controls, and Russian lawmakers passed a bill enabling asset freezes, it appears Russia has reached its limit.
- *RUSSIA SAID TO WEIGH CAPITAL CONTROLS IF NET OUTFLOWS INTENSIFY
The Ruble is plunging towards 40 to the USD (CB intervention levels), US equity futures gapped lower, and European stocks are sliding.
As Bloomberg reports,
Russia’s central bank is weighing the introduction of temporary capital controls if the flow of money out of the country intensifies, according to two officials with direct knowledge of the discussions.Such measures would be preventative and used only if net outflows rise significantly, the people said, who asked not to be identified because no decision has been made. They didn’t give a timeline or a level that may force such a move, saying they are looking at all possible scenarios.The discussions are the latest sign that U.S. and European sanctions are hurting Russia and rethink policies the central bank has sought to avoid. The Economy Ministry last week raised its estimate for this year’s outflows to $100 billion from $90 billion. Russia hasn’t had a net inflow of private capital since 2007, the year after lifted restrictions.Central bank Chairman Elvira Nabiullina, a former economic aide to President Vladimir Putin, said in an address to the government on Sept. 25 that “introducing capital controls doesn’t make sense.”Still, if trades restrictions -- such as the U.S. and EU sanctions and Russia’s retaliatory measures -- are prolonged and the tax burden rises, capital outflows will intensify. That will push the regulator to shift its focus more toward ensuring financial stability from fighting inflation and use various instruments “including non-standard” means, Nabiullina said.The central bank’s press service declined to comment. The Finance Ministry isn’t discussing such measures, Svetlana Nikitina, a spokeswoman, said by text message.
US equities gapped lower...
And the Ruble plunged...
- *RUBLE WEAKENS TO BOUNDARY OF RUSSIA CENTRAL BANK'S TRADING BAND
- *RUBLE WEAKENS TO LEVEL WHERE CENTRAL BANK SAYS WILL INTERVENE
Posted: September 30, 2014, 3:10 pm
China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency.
The move will lower transaction costs and so make yuan and euros more attractive to conduct bilateral trade and investment, the People’s Bank of China said today in a statement on its website. HSBC Holdings Plc said separately it has received regulatory approval to be one of the first market makers when trading begins in China’s domestic market.
The euro will become the sixth major currency to be exchangeable directly for yuan in Shanghai, joining the U.S., Australian and New Zealand dollars, the British pound and the Japanese yen. The yuan ranked seventh for global payments in August and more than one-third of the world’s financial institutions have used it for transfers to China and Hong Kong, the Society for Worldwide International Financial Telecommunications said last week.
“It’s a fresh step forward in China’s yuan internationalization,” said Liu Dongliang, an analyst with China Merchants Bank Co. in Shenzhen. “However, the real impact on foreign exchange rates and companies may be limited as onshore trading volumes between yuan and non-dollars are still too small to gain real pricing power.”
Transactions exchanging yuan for dollars totaled 12.2 trillion yuan in the first half of 2014, dwarfing the 110.4 billion yuan worth of trades for euros and the 251.7 billion yuan for yen, the PBOC said in a monetary policy report last month.
China’s trade with European Union nations grew 12 percent from a year earlier to $404 billion in the first eight months of 2014, according to data from the Asian nation’s customs department. That compares with just $354 billion with the U.S. during the period.
French and German companies lead among countries outside of greater China in the use of the yuan, according to a July report by HSBC that was based on a survey of 1,304 businesses in 11 major economies that have ties with mainland China. Some 26 percent of French corporates and 23 percent of German companies were using the currency to settle trade, the highest proportions apart from mainland China, Hong Kong and Taiwan.
China appointed yuan clearing banks this year in Frankfurt, Paris and Luxembourg, and Germany’s financial capital as well as Paris were awarded quotas under the Renminbi Qualified Foreign Institutional Investor program to invest the currency raised offshore in China’s domestic capital markets.
“Given the appointments of renminbi clearing banks in Frankfurt and Paris, today’s announcement is largely expected,” Australia & New Zealand Banking Group Ltd.’s economists led by Liu Li-gang wrote in a research note today. The agreement marks a “significant milestone” in yuan internationalization as the euro is the only G3 currency that has not had direct conversion with the yuan, Liu said.
The European Central Bank is able to draw on a maximum 350 billion yuan ($57 billion) swap line from the People’s Bank of China under the terms of an agreement signed in October 2013. The PBOC can access 45 billion euros ($57 billion) under the terms of the currency swap.
Posted: September 29, 2014, 5:40 pm
Fukushima nuclear material reported in West Coast groundwater; It’s discharging into Pacific Ocean — Fallout also found in meat and fish from same area — “Routinely detected’ in plant life long after March 2011
Diablo Canyon Power Plant (DCPP) Units 1 and 2 Annual Radiological Environmental Operating Report, published April 30, 2014: Isotopic releases occurred in Japan and were carried by the jet stream to the west coast of the United States… [DCPP] periodically detected cesium (Cs-137) within market fish and cow meat due to deposition of Cs-137 from […]
Posted: September 29, 2014, 5:14 pm
By Saxo Bank’s Steen Jakobsen Surely not this old chestnut – again? ‘Interest on debt grows without rain’ – Yiddish proverb This proverb explains most of what goes on in policy circles these days. We are now watching Extend-and-Pretend, Episode VI: Promises for improvement amid ever growing debt levels. In brief, we’re still working with […]
Posted: September 29, 2014, 2:28 pm
London (AFP) – The British inventor of the World Wide Web warned on Saturday that the freedom of the internet is under threat by governments and corporations interested in controlling the web. Tim Berners-Lee, a computer scientist who invented the web 25 years ago, called for a bill of rights that would guarantee the independence […]
Posted: September 29, 2014, 2:22 pm
Last week, President Obama announced an ambitious — and expensive — plan that effectively placed the U.S. military at the forefront of the global fight against the worst Ebola outbreak in history. In an effort that could cost as much as $750 million in the next six months, he assigned up to 3,000 military personnel to West Africa to “combat and […]
Posted: September 28, 2014, 5:04 pm
A mostly obscure, privacy-orientated social network – an ‘anti-Facebook’ of sorts – has recently undergone meteoric growth. It poses itself as an advert-free enterprise which is not going to become a tool to manipulate its users. ‘Anti-facebook’ network Ello kicked off in July as an invite-only social network seeking to have an advert-free user-orientated role […]
Posted: September 28, 2014, 1:17 pm
In a dramatic stroke of luck for the Kremlin, this morning there is hardly a person in the world who is happier than Russian president Vladimir Putin because overnight state-run run OAO Rosneft announced it has discovered what may be a treasure trove of black oil, one which could boost Russia’s coffers by hundreds of […]
Posted: September 28, 2014, 1:12 pm
The Russian Duma has passed the final reading of a law forbidding holders of foreign passports from controlling or owning more than 20 percent of any media outlet. The law, proposed just ten days ago, will extensively affect Russia’s publishing sector. “The freedom of the press is guaranteed by our Constitution, and won’t be affected,” […]
Posted: September 27, 2014, 5:20 pm