Central Bank: sanctions to have no impact on Russians' dollar deposits

Central Bank: sanctions to have no impact on Russians' dollar deposits Photo: wikipedia.org

Even if the United States bans Russian state banks from using dollars as part of new sanctions, all obligations to people will be fulfilled in the same currency in which they are denominated, according to the governor of the Central Bank. At the moment, Russians hold about 20% of their savings in foreign currencies.

Head of the Russian Central Bank Elvira Nabiullina ensured Russian depositors who save in foreign currencies that their money was safe whatever new sanctions the US would impose on state-owned banks, reports Bloomberg. According to Nabiullina, the regulator doesn't see any kind of threat to foreign currency deposits and hasn't considered any kind of forced conversion. ''We've never even thought about this.'' She added that the resources of the Central Bank and the national banking system as a whole were sufficient to ensure that all obligations to people would be fulfilled in the same currency in which they were denominated regardless of the situation.

The US government is currently considering new sanction bills against Russia. One of the harshest options bars Americans from buying new issues of Russian sovereign debt and bans Russia's largest state banks from using dollars. The uncertainty has entailed speculations that Russian savers might be forced to accept payment in rubles if the US Congress hits Russian state banks with the new sanctions. Earlier last week, CEO of VTB Group Andrey Kostin suggested that his bank might not be able to honour the claims of dollar depositors in such extreme circumstances.

According to Governor Elvira Nabiullina, the Central Bank doesn't see any kind of threat to foreign currency deposits and hasn't considered any kind of forced conversion. Photo: kremlin.ru

Many Russians prefer to save in foreign currency due to the ruble's traditional volatility. The Central Bank estimated that the share of savings held in foreign currencies might amount to 20% of Russians' overall savings and reach $87 billion. As for corporate deposits, about a third of them are in currencies other than rubles, as natural resource exporters are paid in dollars. The Kremlin's spokesperson Dmitry Peskov said on Friday that the government had no plans to force depositors to convert their holdings.

The ruble has been under intense pressure this year, so the Central Bank has even decided to raise interest rates for the first time since 2014 in order to decrease inflationary risks. A weakening exchange rate threatened to spur price growth by making imports more expensive. After the decision was announced on Friday, the ruble, which had lost more than 8% since the last rate review in July, flipped to gains. According to Nabiullina, the policy may be eased by the end of 2019 or the first half of 2020, although further tightening also can't be ruled out. The regulator will also extend its suspension of foreign currency purchases until the end of 2018 to support the ruble.

By Anna Litvina