- Статьи
- Economy
- To make a contribution: the SCO will create a depository to replace Euroclear and Clearstream
To make a contribution: the SCO will create a depository to replace Euroclear and Clearstream
Russians will again be able to freely invest in foreign assets, and foreign investors will be able to finance projects in Russia: the SCO countries will create a depository to replace Euroclear and Clearstream. The new Development Bank of the Shanghai Cooperation Organization should take over this function, Finance Minister Anton Siluanov told Izvestia. Russia and China are already actively engaged in developing the concept of the SCO bank. The parties touched upon its key functions at the WEF, and will discuss them in more detail at a meeting of the financial dialogue this fall, the minister said. How this will reduce dependence on Western infrastructure and whether there are risks is in the Izvestia article.
How the SCO Development Bank will work
Following the recent SCO summit in China, many key decisions were made. Among them is the establishment of the SCO Development Bank. Russia and China have taken an active role in this. After the summit, in Beijing, the parties held large-scale bilateral talks. The discussion of topical issues, including the SCO Development Bank, continued at the Eastern Economic Forum, at the level of the Ministry of Finance, Anton Siluanov, head of the Russian Finance Ministry, told Izvestia.
Meeting in the SCO Plus format with the participation of the heads of the Shanghai Cooperation Organization (SCO) member states, heads of SCO observer states and heads of international organizations in Tianjin
According to him, "we need to have our own independent payment infrastructure." This is especially important against the background of sanctions, when the financial channels of the West become inaccessible not only to Russia, but also to other partners. In particular, therefore, according to the minister, the issue of creating an independent depository on the basis of the SCO bank is also being discussed.
— We would like this bank, perhaps based on it or it, to create opportunities for our investors in our countries to be able to freely buy and sell securities in any country. That is, to perform such an independent depository function in its own way. This topic has also been discussed with our Chinese partners," Siluanov said.
For more than three years now, Russian investors have been trying to regain control of foreign securities and unpaid earnings. Due to Western sanctions, most of the assets have been blocked in the largest European depositories Euroclear and Clearstream since 2022. Therefore, investments for Russians have become very risky. Through the SCO Development Bank, it will be possible to finance investment projects in the organization's countries, as well as provide their citizens and companies with financial market services that they do not have for one reason or another, explains independent expert Andrei Barkhota.
Thus, the SCO Development Bank can actually become a real alternative to European depositories. However, it's too early to say that this is how it will work. There are still obstacles to the growth of investments in securities of foreign issuers through the SCO Bank's depository. Among them are the high profitability of ruble—denominated securities, as well as an ambiguous forecast for quotations of securities denominated in foreign currency, the expert draws attention. In addition, there is a relative risk of asset freezing, as foreign securities will be issued and accounted for outside our country, which means that settlements will take place there, says independent financial adviser Anna Usenko. But, according to her, there is certainly potential.
—The SCO can become a tool for seamless trade in foreign securities between countries that sign an agreement," the expert says.
The question is also to what extent the Asian market (the SCO countries mainly represent this region) will be able to meet investors' expectations.
Moscow and Beijing have already agreed to discuss all these aspects in more detail at the upcoming meeting of the Russian-Chinese financial dialogue this fall, Siluanov told Izvestia. This mechanism has been in operation since 2006: representatives of the Ministries of Finance, the Central Bank, as well as commercial banks of Russia and China participate in it.
By the way, much will depend on the policy of the central banks, and, of course, not only the Russian Federation and China. The infrastructural capabilities and desire of each of the SCO countries will be key, Usenko added.
What the SCO Development Bank will give to Russian business
The SCO countries already have something to rely on in the implementation of the new project. With the participation of both Russia and China, the Asian Infrastructure Investment Bank (AIIB) and the New BRICS Development Bank have been established and are successfully operating.
— We see that the existing banks — the AIIB and the NBR — are funded and lend in foreign currencies of non-participating countries. That's why I say: if we create a new financial institution, let's make it independent of Western currencies too, in order to freely lend to whatever you want, to whomever you want," Anton Siluanov emphasized.
Since 2022, Russian borrowers have been denied access to global financial markets due to US and EU sanctions, and Chinese banks have avoided transactions with Russian companies due to the risk of secondary sanctions. At the same time, cooperation, at least between the Russian Federation and the People's Republic of China, on simplifying project financing is already gaining practical meaning. For example, China is preparing to open the domestic bond market to large Russian energy companies such as Gazprom, Gazprom Neft and Rosatom. The opening of the market indicates the deepening of diplomatic and economic ties between Russia and China.
— The placement of bonds in China will give these companies the opportunity to raise money at more affordable rates in yuan, which is important against the background of the high cost of loans in Russia and the ban on foreign loans. This will allow us to receive financing for such large–scale projects as the Power of Siberia — 2 and the construction of nuclear power plants," says Anna Usenko.
Amur Gas Processing Plant processing multicomponent gas supplied via the Power of Siberia gas pipeline
In the meantime, one of the most realistic and immediate tasks of the SCO Development Bank is to promptly provide interstate loans. And digital calculations will greatly simplify it, the development of which, according to Siluanov, is a priority.
— We discussed with our partners from China the topic of how this bank should deal with new types of settlements, digital settlements, digital rubles, digital currencies, digital financial assets, in order to be independent of Western infrastructure, — said the head of the Ministry of Finance.
"Digital settlements" means that the SCO bank is designed to accumulate excess liquidity and direct it to finance projects in countries where there is a high demand for it. At the same time, financing in yuan looks the most advantageous in this design, Barkhota said.
In any case, the main and main task of the new bank is to reduce the level of dependence of SCO members on Western financial infrastructure and allow trade between the countries to develop freely.
— The key element will be the synchronization of existing national payment systems with each other. This will create a powerful platform for cross—border settlements without the involvement of Western intermediaries and external risks," concluded Alexey Tarapovsky, founder of Anderida Financial Group.
According to experts, even a partial transfer of 30-40% of mutual trade to this platform is equivalent to $700-800 billion and will allow participating countries to save billions on bank fees.
All this will also help attract new assets and enable foreigners to enter the Russian market, which is attractive in terms of opportunities, and increase investments in the Russian economy, Usenko notes. Due to the high key rate of the Central Bank (18%), many companies cannot cope with servicing expensive loans, and money for development is needed. Therefore, foreign investors can become an additional source of financing for Russian business today.
Переведено сервисом «Яндекс Переводчик»
