Switching to the yuan
From April 1, the Bank of Russia introduces differences in the requirements for banks to create reserves in foreign currency, depending on whether a friendly country produces it or not. Information about this is published on the website of the regulator. For all currencies of unfriendly countries, the required reserve ratios will be 7.5%, for all others — 5.5%. It would seem that the news concerns only the internal activities of banks. But the consequences of the decision may affect everyone who uses bank exchangers, who may finally lose dollars and euros.
The introduction of differences in bank reserve requirements depending on the “friendliness” of the currency is reportedly intended to encourage further de-dollarization, de-euroization, de-poundization and other “de-” currencies of unfriendly countries. The structure of banks' balance sheets should be changed in favor of friendly currencies. Mandatory reservation for them, that is, keeping certain amounts of money in special accounts with the Bank of Russia, the amount of which is set by the regulator, is necessary so that in case of a crisis, each bank has a “liquidity cushion”.
“To put it simply, each bank is obliged to keep its “stash” in the Central Bank of the Russian Federation, so that if a massive outflow of depositors from banks suddenly begins, they can withdraw this money from their accounts in a timely manner and fulfill their obligations to customers,” explains Natalia, Leading Analyst at Freedom Finance Global Milchakova. In her opinion, there is nothing surprising in the fact that the Central Bank raises the required reserve ratio for the currencies of unfriendly countries. “Despite the fact that foreign currency deposits in banks, according to the regulator, take only the third place in popularity among the types of foreign currency savings of Russians after keeping cash currency at home and storing foreign currency in foreign banks, a significant part of citizens still keep foreign currency savings in banks —even with fees and limits», — specifies an expert.
And since April 1, the Central Bank of the Russian Federation has set a simple requirement for its wards: if you want to take “unfriendly” currencies to your accounts, please deduct 7.5% of their amounts. Well, for other currencies — only 5.5%. As a result, deposits in dollars, euros, pounds, francs, yen become less profitable for them… How can this affect clients? “Banks will begin to reduce rates on deposits in unfriendly currencies, raise commissions,” says TeleTrade analyst Vladimir Kovalev. “At the same time, “friendly” yuan, dirhams, lira, tenge receive privileges and become more profitable.” Their use is welcomed, the share in deposits and settlements is rising. Banks get additional opportunities to use these currencies for their operations and investments, to finance foreign economic activity of clients, the expert noted.
The rejection of «toxic» currencies has been going on for a year, but it is curious that the regulator introduces the differentiation of reserves in them for banks only now — more precisely, from April 2023. Why? “This was done for a reason: quite recently, Chinese President Xi Jinping flew to Moscow to meet with the Russian president,” says international financial analyst Andrei Plotnikov. — And the most important agreement is that now Russia will sell oil products and energy to the countries of Latin America, China, Africa, not for rubles, but for yuan. This is done in order to reduce the dominance of the dollar.” According to the expert, not only banks, but also citizens of the Russian Federation should also get rid of foreign currencies. In his opinion, these news will affect the fall in rates to 65 rubles per dollar and 73 rubles per euro.
But rates are rates, but will dollars and euros remain in exchange offices in banks after that, or will there now be only yuan and dirhams? According to Valery Emelyanov, an expert on the stock market at BCS World of Investments, cash dollars, euros and pounds will not go anywhere. It is profitable for banks to earn on the spread — the difference between the buying and selling rates of a currency. They willingly buy and sell banknotes of any countries, as long as there is a demand for them. Since the new paper “unfriendly” currency no longer enters the country due to sanctions, banks will try to buy back what is left from the population in order to resell it later to those who need the currency. “The turnover of paper currency is likely to even grow, because non-cash exchange will become more expensive, and not all banks will carry it out at all,” the expert believes. The innovation of the Bank of Russia does not cancel the circulation of dollars and euros. However, banks can use it as an excuse to increase the difference between their buying and selling in order to make more money on those who need cash in «toxic» monetary units.