NEW – March 6, 2022
Economist Evgeny Yushchuk made a post on Facebook in which he called Russia’s response to the freezing of Central Bank funds and anti-Russian actions in the financial sphere “a retaliatory nuclear land mine”.
Here is his text:
“A few days ago, I said that the actions of our financial authorities are working at the level of a ‘C’ school grade, since the measures taken do not affect loans and leave a lot of holes. In the course of making new decisions, I said that politics is changing before our eyes, holes are being plugged, there is not even a hint of monetary character and signs of playful hands of ‘tornado Elvira’ [Nabiulina – ed].
Now I can safely say that the financial authorities have worked for a solid ‘B’, and for an assessment of ‘A’ it is necessary to return the refinancing rate to a normal level and launch a ruble issue.
You ask what happened? Vladimir Putin signed a new decree (Decree of the President of the Russian Federation No. 95 dated 05.03.2022 ‘On the temporary procedure for fulfilling obligations to certain foreign creditors’), as if he unwrapped a gift in childhood, when he read it, he could not believe it.
The bottom line is that if you have a loan from a Western bank/company from the country that imposed sanctions (hello Switzerland, which did not survive with neutrality), the payment per month is more than 10 million rubles in equivalent, then you do not need to transfer the currency. You, being a debtor, apply to a Russian bank and ask it to open a correspondent ruble (!!!) invoice in the name of the lender – the latter’s consent is not required at all. Next, you transfer rubles to this account at the current exchange rate and it is considered that you have fulfilled your obligations.
Allowing payments in foreign currency only through the Central Bank of the Russian Federation/the Ministry of Finance on an individual basis (for good behaviour …). The transfer of the debt does not change anything — the correspondent account is in rubles.
According to the results, about $460 billion (minus China’s loans) disappear from the balance sheet of Western banks, triggering a cascade of collapses. It’s impossible to understand where the equivalent in rubles is located, and without violating the laws of their country/consent to the conversion, Western banks cannot do anything with these rubles. I am looking forward to the opening of European markets with interest, this is a retaliatory nuclear financial bomb, up to the collapse of the Pyramid Valley.
My sincere respect to managers, financiers, economists and the Person who made this decision, that in such a short time (I understand what I’m talking about …) she was able to figure out and do this ‘from scratch’.
Well done! Bravo!”
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