The Central Bank of the Russian Federation wants the government to order state companies to convert their foreign-exchange holdings into the currencies of countries that haven’t joined sanctions imposed by President Putin’s invasion of Ukraine.
The proposal, aimed at discouraging businesses from using what the Bank of Russia called “toxic” currencies as part of a broader de-dollarization effort, is among steps laid out in a report it published this week for public discussion.
“Our country faces large-scale goals of the structural transformation of the economy, its modernisation, the achievement of technological sovereignty and the reorientation of international economic relations,” says the report.
“The banking system must respond to these challenges by actively participating in the financing of economic development.”
Additional measures may be needed to prompt all non-financial firms to transfer their holdings into the currencies of countries other than those Russia considers “unfriendly,” according to the central bank.
“It makes sense for companies that have savings in the currencies of unfriendly countries to move them into other currencies,” it said.
Russia published a list in March of countries it regards as unfriendly in retaliation for unprecedented sanctions imposed by the US and its allies over the Kremlin’s war in Ukraine.
It has since added more nations to the list that, among others, includes the US, European Union members, the UK, Australia, Canada, Japan and Switzerland.
The sanctions deprived the central bank of access to half of its international reserves, leaving it in possession of only gold and yuan.
Before the war, the Bank of Russia had spent years reducing exposure to the dollar. The measures have also isolated Russia from Western financial markets and led to an exodus of foreign investors from the country.
Finance Minister Anton Siluanov has previously suggested saving the government’s windfall energy revenues in currencies from “friendly” nations.
The central bank has since said it’s working on ways to create a new mechanism to enable payments and trade that could be settled in rubles and currencies that aren’t yet liquid enough.
It also suggested that it wants to continue easing restrictions on the cross-border movement of money for residents and people from countries that haven’t imposed sanctions on Russia.
It’s been rolling back capital controls imposed immediately after the war began to stabilise markets and the ruble, following a surge in the currency’s value as imports collapsed while foreign-currency earnings boomed from increased prices for oil and gas exports.
The central bank also outlined another plan for some companies to resume publication of financial reports, which many have suspended since the invasion and the international sanctions backlash.
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