The sanctions imposed by the European Union on the National Settlement Deposit* highlight the high risks of the accumulation of large foreign exchange liquidity on the periphery of the Russian financial infrastructure.
This is stated in the document of the Central Bank of Russia “Overview of Financial Market Risks”, where regulators stated that “given the high sanctions risk, market participants are recommended to diversify the use of foreign currencies and continue to implement all measures to reduce the value of their balance sheets in these currencies.”
Funds placed in euros and francs in correspondent banks of the National Settlement Deposit were seized, according to the Central Bank of Russia, in addition to the imposition of sanctions by the European Union and Switzerland on July 3 and 10, respectively, on Russian assets (securities and cash in different currencies) , which were frozen in the accounts of national settlement deposits of Euroclear and Clearstream.
To resolve this situation, the National Settlement Deposit has suspended operations on customer bank accounts in euros and francs, operations in other foreign currencies continue as usual. In addition, the depository, together with the Moscow Exchange, is preparing the necessary documents to challenge the EU sanctions, the Central Bank said in a review.
In order to discourage foreign currency investments in Russian infrastructure, the National Clearing House introduced increased commissions on relevant guarantees from the beginning of June, according to the Central Bank, as participants in these conditions began to reduce their foreign currency account balances. open with center.
According to the review, the introduction of national sanctions on settlement deposits has also affected settlements in other currencies, including the dollar, and may be the reason for increased requirements for compliance procedures in foreign correspondent banks.
However, according to regulators, the ability of the National Settlement Deposit to perform its functions as a central vault in the Russian market has not been affected by EU sanctions.
Source: Interfax
*National Settlement Depository is a Russian non-banking financial institution Central Securities Depository of the CSD located in Moscow, providing deposit, settlement (bank accounts and related services to financial market entities) services for both securities listed in the Law of the Russian Federation of 2011. On the Central Securities Depository” and other Russian and foreign debt and issue-grade securities included in the Moscow Exchange Group.