[Shanghai 3rd Archyde.com]–Anz Research’s analysis shows that the holdings of Russian central banks and sovereign wealth funds (SWF) may account for nearly a quarter of the Chinese bonds held by foreigners. The list revealed this week. It may be a means to mitigate the effects of western sanctions against Russia.
Following Western sanctions against Russia’s invasion of Ukraine, Russian companies are looking for detours with emerging countries with which they have a friendly relationship, such as China, and there are signs that the dollar will be replaced by more yuan payments.
ANZ economists said in a report that the yuan bonds held by the Russian central bank and the Russian state fund are estimated to be $ 80 billion and $ 60 billion, respectively.
According to the latest data, foreigners held bonds in the Chinese interbank bond market were 4.07 trillion yuan ($ 644.13 billion) as of the end of January.
ANZ said, “Russia is watching to cash this asset if it needs cash (in RMB) to fulfill other payment obligations.”
The yuan’s share of the Russian central bank’s foreign exchange reserves was 13.1% as of June last year, up from just 0.1% in June 2017. Meanwhile, the dollar’s share fell sharply from 46.3% to 16.4%.
However, ANZ may use China’s own “Cross-Border Interbank Payment System (CIPS)” to avoid the effects of sanctions such as Russia’s exclusion of international remittance and payment systems from SWIFT (International Interbank Communication Association). However, it is unlikely that the use of the yuan will increase significantly in this crisis.
ANZ pointed out that “CIPS is primarily a RMB settlement system and more than 80% of transactions on CIPS rely on SWIFT telegraph. It is not an immediate replacement for SWIFT.”