Eastern Europe

Chinese Yuan Is Now The Main Currency For Settlement In Russia As Western Banking Sanctions Bite

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The U.S. Department of the Treasury sanctioned the Moscow Exchange on Wednesday, along with its subsidiaries, the National Clearing Center (NCC) and the National Settlement Depository (NSD). Being blacklisted effectively cuts off the sanctioned company from the global dollar system. Unsurprisingly, after the sanctions, the exchange announced an end to trading in U.S. dollars and euros. The next day it canceled trade in Hong Kong dollars, reported independent Russian news outlet The Bell.

As a result, many foreign banks, including those in China and Central Asia, stopped settling with their Russian counterparts in euros, U.S. dollars, and Singapore or Hong Kong dollars. China’s yuan is now the main currency for exchange trading and settlements in Russia.

This was not a surprise for the Kremlin. Sanctions against the NCC and NSD had been discussed since late 2022, and Moscow’s plans were drawn up long before the current announcement. Now, trading in U.S. dollars and euros, which accounted for less than half of the total trade on the Moscow Exchange, will move to an over-the-counter settlement. Buyers and sellers will need to seek each other out and complete deals on a one-to-one basis.

The most consequential announcement may be that the U.S. is broadening the scope of secondary sanctions on firms doing business with Russia.

In its press release, the U.S. Treasury highlighted important changes to its instructions for banks in third countries when it comes to complying with sanctions on Russia. Any violations could lead to secondary sanctions.

Secondary sanctions of foreign banks doing business with Russia will have a massive impact.

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1 comment

Daniel June 16, 2024 at 3:23 pm

And you think BRICS cares? Do you think we’ll care when BRICS bans all energy exports to the US? And they’re already claiming they will. It’s in their by-laws. Biden says we have windmills.


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