Russia has been using the Chinese yuan to get around sweeping Western sanctions — but this side door may be closing
Russia has been using China's yuan to get around sanctions — but at least one major Chinese bank has halted transfers from Russia over fears of secondary sanctions from the West.
The Bank of China, a major Chinese lender, has started restricting transactions using the yuan between Russian clients and lenders in the US, the European Union, Switzerland, and the UK, Russia's privately ownedThe restrictions impact transfers involving the Bank of China as the correspondent or intermediary bank that moves money from Russia to third-party countries.
"The decision was not made by China, but rather by the EU and the US. That is how they are trying to ramp up the sanction pressure by choking off alternative channels in the form of yuan," Pavel Semyonov, the chairman of the board of Modulbank, told RBC, per atranslation. Russian clients can still make yuan transfers within the Bank of China network, Semyonov added to RBC.
The Bank of China is imposing the transfer restriction over fears of secondary sanctions or other restrictions, Dmitry Lesnov, Finam's customer service development head, told RBC. The Bank of China's crackdown on intermediate yuan transfers comes as the Russian economy has become more dependent on the currency amid sanctions over the Ukraine war, which includes
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