The Russian Federation is essentially announcing a strategic default and will pay individuals or entities deemed enemies of Russia to be repaid in Russian rubles on dollar-denominated debt, or other foreign debt denominations.
Moscow. 5th of March. INTERFAX.RU – Russian President Vladimir Putin signed a decree “On the temporary procedure for fulfilling obligations to certain foreign creditors,” the Kremlin press service reported.
The Government of the Russian Federation was instructed to determine, within two days, a list of foreign states committing unfriendly actions against Russia, Russian legal entities and individuals. The Central Bank of the Russian Federation has been granted the right to give official clarifications on the application of this decree, as well as previous presidential decrees.
The decree establishes a temporary procedure for fulfilling the obligations of Russia, constituent entities of the Russian Federation, municipalities and residents to foreign creditors – persons associated with states “who commit unfriendly actions against the Russian Federation of Russian legal entities and individuals.” Such foreign creditors in the document include citizens of these states, persons whose place of registration, place of primary business or profit from activities are these states, as well as persons “who are under the control of these foreign persons, regardless of their place of registration ( except for cases where the place of their registration is the Russian Federation) or the place of their primary business activities.
“The procedure for fulfilling obligations established by this decree applies to the fulfillment of obligations in an amount exceeding 10 million rubles per calendar month, or in an amount exceeding the equivalent of this amount in foreign currency at the official exchange rate of the Central Bank of the Russian Federation, established on the 1st day of every month,” the statement says.
“In order to fulfill the obligations referred to in clause 1 of this decree, the debtor has the right to send to a Russian credit organization an application for opening in the name of a foreign creditor or a foreign organization that has the right, in accordance with its personal law, to record and transfer rights to securities (foreign nominal holder) in respect of which obligations are being fulfilled, an account of type “C”, intended for settlements on these obligations. In order to fulfill obligations related to the issue of securities, the debtor has the right to send such an application to a non-bank credit institution that is a central depository in accordance with with the Federal Law of December 7, 2011 No. 414-FZ “On the Central Depository,” the document says.
“To provide that Type C accounts from the date of entry into force of this decree include depo accounts opened before this date in the name of a non-resident who is a foreign creditor, or in the name of a foreign nominal holder,” it says.
“C” type account mode is established by the decision of the Board of Directors of the Central Bank of the Russian Federation, subject to official publication in accordance with Article 7 of Federal Law No. 86-FZ of July 10, 2002 “On the Central Bank of the Russian Federation (Bank of Russia)”. Account type “C” is conducted in rubles,” the decree says.
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