Menu
Latest
Menu
Latest
News

Russian Banks look east for salvation

9 March 2022

Russian banks are looking to China’s UnionPay to maintain financial stability after Visa, Mastercard, and American Express all decided to suspend operations in Russia.

The invasion of Ukraine has caused widespread international sanctions against Russia, companies are stopping projects in the country, and in a dramatic move, Visa, Mastercard, and American Express stopped serving Russian banks. In a statement issued on Sunday, American Express said, "One of our company values is to 'Do What is Right’... This principle has guided us throughout this difficult crisis and will continue to do so, as we stand by our colleagues, customers, and the international community in hoping for a peaceful resolution to this crisis." Visa and Mastercard issued similar statements condemning Russian actions in Ukraine on Saturday. The decision is likely to hurt the companies; Russian transactions comprise 4% of total net revenue for Visa and Mastercard.

The suspension of the card payment systems in Russia has caused banks in the country to look towards alternative card payment systems, one of those is UnionPay, a Chinese system. The Russian Central Bank said that commercial banks within Russia are looking to issue cards with UnionPay. Russia has been working on financial independence since 2014 when sanctions were imposed after Russia annexed Crimea. Sberbank, Russia’s largest lender, stated that domestic transactions would continue to work. However, there remains significant financial interdependence with Western Countries. As a result, UnionPay is now the leading contender to replace Visa, Mastercard, and American Express.

In addition to the moves towards UnionPay, some Russian companies are now accepting payments in Yuan, and there is talk of Russia turning to CIPS, the Chinese equivalent of SWIFT. The Russian pivot towards the Yuan and Chinese financial systems could reduce the dominance of the US Dollar in global transactions. China has been working on diminishing the supremacy of the Dollar through attempts at internationalising the Yuan since 2016. For the time being, tight capital controls in China and the risk of secondary sanctions means that the Russian turn to China is not likely to significantly erode the dominance of the American currency. Nevertheless, the relationship between China and Russia, declared as 'without limits', will undoubtedly be further strengthened through greater financial links.

Sources: CommonSpace.eu with Axios (Virginia), Reuters (London), CBS News (New York), and other media agencies.
Picture: UnionPay 

Related articles

Editor's choice
News
Borrell tells the European Parliament that the situation in Afghanistan was critical, but the EU will remain engaged
Trending

Borrell tells the European Parliament that the situation in Afghanistan was critical, but the EU will remain engaged

9 June 2021
Borrell underlined that the European Union will make every effort to support the peace process and to remain a committed partner to the Afghan people. "Of course, we will have to take into account the evolving situation, but disengagement is not an option.  We are clear on that: there is no alternative to a negotiated political settlement, through inclusive peace talks.
Editor's choice
News
UNDP report highlights devastating effects of the Gaza conflict saying it has set human development in the territory back by about 20 years
Trending

UNDP report highlights devastating effects of the Gaza conflict saying it has set human development in the territory back by about 20 years

3 May 2024
The war on Gaza has depleted much of the physical and human capital in the enclave and severely affected the rest of the occupied territories in the West Bank and East Jerusalem, according to a newly published UN report. It warns that in addition to the thousands of lives already lost, and the many people injured or maimed for life, the risk of “future lost generations is real.” The report by the UN Development Program, titled “War in Gaza: Expected Socioeconomic Impacts on the State of Palestine,” highlights the widespread damage caused by the conflict, including: the destruction of about 80,000 homes, resulting in significant, and possibly long-lasting, displacement and homelessness among the population; the depletion and pollution of natural resources; and the destruction of infrastructure such as water and sanitation systems, educational institutions and health care facilities. It said human development in Gaza has been set back to the extent it could take 20 years to return to prewar levels, and recovery seems unlikely in the absence of a functioning economy, adequate institutional capacities, and the ability to trade. “With 37 million tons of debris, compared to 2.4 million tons of debris in the 2014 war, and 72 percent of all housing in Gaza destroyed, and 90 percent of commercial and all other buildings destroyed, this is unprecedented.” The report analyzes the devastating effects the ongoing war in Gaza has had on the Palestinian people, their economy and human development in the territory, and predicts the possible consequences based on scenarios that assume a further one to three months of conflict. Based on official figures, by April 12 this year, at least 33,207 Palestinians had been killed in Gaza, an estimated 7,000 were missing, and 80,683 had been injured. About 70 percent of the dead were women and children. Many of the injured are likely to suffer long-term consequences, including disabilities. These figures reveal that at least 5 percent of the population of Gaza has been killed, maimed or injured. In addition, about 500 Palestinians have been killed in the West Bank since the beginning of the war. “No other armed conflict in the 21st century has caused such a devastating impact on a population in such a short time frame,” the report notes. It states the number of people in Gaza living in poverty has risen to 1.67 million in the six months since the conflict between Israel and Hamas began in October last year.

Popular

Editor's choice
News
UNDP report highlights devastating effects of the Gaza conflict saying it has set human development in the territory back by about 20 years
Trending

UNDP report highlights devastating effects of the Gaza conflict saying it has set human development in the territory back by about 20 years

3 May 2024
The war on Gaza has depleted much of the physical and human capital in the enclave and severely affected the rest of the occupied territories in the West Bank and East Jerusalem, according to a newly published UN report. It warns that in addition to the thousands of lives already lost, and the many people injured or maimed for life, the risk of “future lost generations is real.” The report by the UN Development Program, titled “War in Gaza: Expected Socioeconomic Impacts on the State of Palestine,” highlights the widespread damage caused by the conflict, including: the destruction of about 80,000 homes, resulting in significant, and possibly long-lasting, displacement and homelessness among the population; the depletion and pollution of natural resources; and the destruction of infrastructure such as water and sanitation systems, educational institutions and health care facilities. It said human development in Gaza has been set back to the extent it could take 20 years to return to prewar levels, and recovery seems unlikely in the absence of a functioning economy, adequate institutional capacities, and the ability to trade. “With 37 million tons of debris, compared to 2.4 million tons of debris in the 2014 war, and 72 percent of all housing in Gaza destroyed, and 90 percent of commercial and all other buildings destroyed, this is unprecedented.” The report analyzes the devastating effects the ongoing war in Gaza has had on the Palestinian people, their economy and human development in the territory, and predicts the possible consequences based on scenarios that assume a further one to three months of conflict. Based on official figures, by April 12 this year, at least 33,207 Palestinians had been killed in Gaza, an estimated 7,000 were missing, and 80,683 had been injured. About 70 percent of the dead were women and children. Many of the injured are likely to suffer long-term consequences, including disabilities. These figures reveal that at least 5 percent of the population of Gaza has been killed, maimed or injured. In addition, about 500 Palestinians have been killed in the West Bank since the beginning of the war. “No other armed conflict in the 21st century has caused such a devastating impact on a population in such a short time frame,” the report notes. It states the number of people in Gaza living in poverty has risen to 1.67 million in the six months since the conflict between Israel and Hamas began in October last year.