Russia has begun using gold to pay China due to problems with bank transfers. Reuters reported.
After the U.S. Department of the Treasury threatened to impose secondary sanctions and tighten transaction checks by credit institutions, Moscow has found an alternative solution: gold is bought, transported to Hong Kong, where it is sold, and cash is deposited into an account at a local bank.
Payments between the two countries are now processed by banks that are not afraid of secondary sanctions due to the lack of global business. However, these banks have outdated IT systems, which forces Russians to hire couriers to transport documents across the border and obtain a physical seal and signature from Chinese bankers.
In addition, Russian companies resort to the services of intermediaries in third countries to bypass checks by Chinese banks, which increases transaction processing costs to 6 percent of the total cost. Previously, these costs were practically zero. «This means a complete stop for many small companies,» a source close to the government said.
Major Chinese state-owned banks are shutting down transactions with Russia en masse, causing payments to stall. Last year, when payment problems were less severe, Russian businesses accumulated $21.4 billion in «foreign assets.» This year, the amount abroad has grown by 108 percent, reaching $44.6 billion, or about a tenth of the economy’s export revenues, estimated by the central bank at $239 billion for January-July.
