Russia plans to put in place a bond repayment mechanism to avoid US sanctions and a potential default before the grace period on its latest coupons passes.
Finance Minister Anton Siluanov said in an interview with the Russian newspaper “Vedomosti” that the proposal would allow foreign investors to open accounts in Russian banks in rubles and hard currency. Unlike the previous payment system, investors will be able to access funds without restrictions.
The mechanism is still under discussion by the government, after which it will be presented to investors, according to “Bloomberg” and reviewed by “Al Arabiya.net.”
The current crisis comes after the US Treasury opened a sanctions loophole, preventing US banks and individuals from accepting bond payments from the Russian government.
According to Siluanov, the proposed structure is a mirror image of the way European countries are currently paying for Russian gas, Vedomosti reported.
“This is how gas payments are made: we get foreign currencies, which are then converted into rubles” on behalf of the gas buyers, he said. “The international bond settlement mechanism will work in the same way, but in the opposite direction.”
It is unclear how the banks involved in converting dollar payments will work with the proposal. The question remains whether the tightened US restrictions will also restrict payments in euros.
In an interview with Rossiya 24 TV on Friday, Siluanov said that euro transfers would not be affected, because the European Union had not adopted restrictions on payments in the single currency. Siluanov said the new mechanism will be ready before the next dollar coupons mature on June 23-24.
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