China and Russia to establish independent financial systems: Russian media
Russia and China have agreed to develop shared financial structures to deepen economic ties in a way that will not be affected by pressure of third countries following talks between the top leaders, Russian media outlet RT reported on Wednesday.
The move will help both countries deter the threat of the US government’s long-arm jurisdiction based on the US dollar denominated international payment network, experts said.
During the talks on Wednesday, top leaders of the two countries called for increasing the share of national currencies in mutual settlements and expanding cooperation to provide Russian and Chinese investors with access to stock markets, said Yuri Ushakov, Putin’s foreign policy advisor, according to RT.
Ushakov said that “particular attention was paid to the need to intensify efforts to form an independent financial infrastructure to service trade operations between Russia and China.”
“We mean creating an infrastructure that cannot be influenced by third countries,” Ushakov added.
The move appears to be Russian’s response to a series threats that the US could push to disconnect Russia from the Brussels-based SWIFT financial system as a form of sanction.
Currently, most bilateral transactions between China and Russia are still denominated in US dollars and traded through the SWIFT system, meaning that the US can block any transaction between China and Russia or completely block the two countries from the international trade settlement system.
“This is why China and Russia need to establish their own financial information transmission systems to protect themselves from the US’ containment,” Li said.
Both China and Russia have been pushing their independent settlement programs.
China launched the Cross-border Interbank Payment System (CIPS) in 2015, an independent clearing system with the yuan, China’s currency, as the quote currency. Similarly, Russia has been developing its own financial messaging System for Transfer of Financial Messages (SPFS).
With both systems already in position it is easy to build an independent Russian-Chinese financial system by linking the two, Li said, adding that for the next step, the two countries may need to work on which currency to be used as quote currency.
Once such system is launched it will also become popular with European companies that wish to trade with Russia but are disenchanted by the US.
