Ruble rumble: Currency gains ground after Tuesday trauma.
RT.com December 17, 2014 07:10
The Russian currency remains volatile Wednesday after it suffered its own ‘Black Tuesday’ losing about 20 percent. The ruble strengthened to 61 rubles per 1 USD, before settling near 62 at market close in Moscow.
After the Central Bank of Russia (CBR) intervened early Tuesday morning, the ruble jumped six percent, briefly trading at 60.51 to the dollar. Before that, the currency, which lost more than 20 percent on Tuesday, continued to dip in early trading.
On Monday the Central Bank of Russia (CBR) spent about $2 billion in currency interventions, the regulator said. This compares to about $774 million spent during all of November.
The Russian financial system is in turmoil with volatility high amid deregulation and uncertainty among traders.
The Russian currency has been tumbling since the CBR abandoned its long-time regulation policy and left the ruble to free float. This week the ruble experienced its worst plunge, with officials saying the situation is as the 2008 financial crisis.
On Tuesday the dollar hit 80 rubles, while the euro passed the 100-ruble benchmark, although they dropped back to 68 and 85 rubles respectively by the end of trading.
Still the bank refuses to impose stricter regulation of currency markets like going back to massive market interventions or forcing exporting companies to sell a share of their profits in the market. Taking these actions “was not discussed in any way,” according to Economy Minister Aleksey Ulyukaev, who took part in an emergency meeting with government members and central bank officials on Tuesday evening.
The US tech giant Apple Inc. was quick to react, saying Tuesday it is suspending online sales in Russia due to the rapid descent of the ruble.
"Our online store in Russia is currently unavailable while we review pricing," Apple public relations representative Alan Hely told Bloomberg.
This is the second currency-related move by Apple since the ruble started its free fall. In November the company raised the price of the iPhone 6 by 25 percent in Russia.
Another warning came from the MSCI investment company that said Russia may be excluded from the MSCI Emerging Markets Index amid the recent economic distress.
It said Russia may be taken off the index if the Russian government chooses to start controlling capital flows or currency transactions, as "freedom of capital inflows and outflows is one of the main classification criteria for an emerging market."
So far Russia has said it will not introduce any form of capital controls.
The Russian government believes the ruble is currently undervalued and will rebound soon, as the rush to sell the currency eases and companies start buying it to pay taxes later this month.
The weakening of the ruble comes as a result of several factors, including the dropping price of oil, Western sanctions against Russia that made it much harder for Russian financial system to obtain foreign credit, and a panic that hit traders amid the market volatility.
Less trade with west is best and rely on domestic market more too! Russia will, in time, come out of this stronger and the west weaker with fewer cards!
Russia: Putin urges businesses to invest in assets.
RuptlyTV Dec 19, 2014
Russian President Vladimir Putin urged the country's leading businesspeople to participate in the diversification of the Russian economy, promising them assistance from the state, he said during a meeting in Moscow on Friday.
Post by TsarSamuil on Dec 28, 2014 10:20:58 GMT -5
Ruble recovers, as big exporters ordered to behave.
RT.com December 26, 2014 16:57
The ruble has seen a full week of recovery after its drastic 20 percent drop on December 16 dubbed as ‘Black Tuesaday.’ This was triggered by the call from the Russian government for businessmen to sell currency earnings.
The Russian ruble closed Friday session at 54 against the US dollar, which compares to the average of 56 on Monday.
“We are now seeing how the ruble is strengthening. It is now approaching, in my view has already approached, the area of a balanced rate, which is also called a fundamental one,” Russia’s Economy Minister Aleksey Ulyukaev said Friday in an interview with Rossiya 24 TV.
A drastic drop in the ruble’s exchange rate has triggered some of Russia’s biggest exporters in agriculture and energy to either accumulate foreign currency earnings or increase sales overseas.
In agriculture, increased exports of grain have caused a shortage within Russia which also pushed prices up.
To balance the market, the Russian government ordered the introduction Thursday of a 15 percent plus €7.5 export duty on wheat from February 1, 2015. The duty was calculated so the price is no less than €35 per ton.
As for oil companies, they started hoarding foreign currency earnings from selling crude which also poses risks to the domestic economy, as the supply was low compared to the increased demand.
After the CBR and a number of businesses raised concerns over the currency risks, President Putin ordered the Government Issue guidelines for all exporting companies to sell their currency earnings.
On December 23 the government urged the five largest state-owned exporting companies including Rosneft and Gazprom to bring the amount of their net foreign currency assets to an amount not exceeding the level of October 1, 2014.
Russian Finance Minister Anton Siluanov said Thursday the weakening period of the ruble has stopped and the national currency is seeing a strengthening trend.
Post by TsarSamuil on Jan 19, 2015 18:40:01 GMT -5
Russian Central Bank voids Standard & Poor’s, Moody’s, Fitch ratings.
RT.com January 19, 2015 14:24
The Central Bank of Russia will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014.
All credit ratings given to Russian companies and banks will now be at the discretion of the Board of Directors of the Bank, according to a press statement Monday. The regulator will assess whether or not the ratings made after March are accurate.
“According to the Bank of Russia Board of Directors’ decision, the rating date for credit institutions and their issued financial instruments, including securities, to implement Bank of Russia regulations, shall be 1 March 2014; as for other entities, listed in the ordinance, and their issued securities, this rating date shall be 1 December 2014,” the press release said.
The decision comes after Fitch and Moody’s downgraded Russian sovereign debt to just above junk status. Standard & Poor’s will decide whether it cuts Russian debt to junk level by the end of January.
Ratings cuts by the international agencies have increased since Crimea rejoined Russia in mid-March; at the same time the West began to levy sanctions against Moscow.
On Friday, Moody’s cut Russia’s government bond rating to Baa3 from Baa2, just one level above junk. The agency also forecast the economy will contract 5.5 percent in 2015, and an additional 3.0 percent in 2016.
The week before, Fitch ratings agency knocked Russia’s investment rating down to BBB-, warning that the country won’t see growth until 2017.
“They’re private companies, so we assume that they’re completely independent and not subject to political pressure. However, they do exist in an American context and are subject there to the international media’s reporting which tends to give a single narrative – a very negative narrative when it comes to reporting – particularly the Russia story,” Ben Aris explained in an op-edge piece after the Fitch downgrade.
Last month the agency put Russia’s sovereign rating on negative watch, worrying investors a junk downgrade is to follow.
Credit ratings are used as a benchmark for investors when deciding where to put money in global markets.
Russia’s Economy Minister Aleksey Ulyukaev says it is fairly likely S&P will downgrade Russia below investment grade, which he estimates will cost the Russian economy an extra $20 or $30 billion.
The ‘Big Three’ charge service fees when they assess a bank or government's creditworthiness. The Bank of Russia did not specify whether individual companies would sever financial contracts with the companies.
Russia and China are in the process of establishing their own rating system Universal Credit Rating Group (UCRG), which will issue its first rating in 2015.
Many Russian economic and finance officials have lambasted the ratings as politically-motivated. All three agencies stopped issuing new ratings on Russian companies that were hit by Western sanctions.
Lower ratings will likely result in less foreign investment, worsening Russia’s economic woes. In 2014, more than $150 billion in capital left Russian banks and companies, more than the record $133.5billion that left in 2008 when the financial crisis hit.
In August, the Central Bank drafted legislation that would require any foreign ratings agency to open a local subsidiary in Russia, to be supervised by the bank.
On January 16, Fitch downgraded 30 Russian financial institutions, including the country’s biggest bank, Sberbank, as well as Vnesheconombank to BBB-. Gazprombank and Rosselkhozbank were downgraded to junk level at BB+.
The ratings agency also downgraded several companies across the energy sector- including Gazprom, Gazprom Neft, Lukoil, and Tatneft. Novatek, Russia's largest independent natural gas producer was placed on watch, and Russian Railways, the country’s largest employer, was also downgraded with a negative outlook.
Post by TsarSamuil on Jan 21, 2015 18:03:14 GMT -5
‘What a dreamer!’ Rogozin ridicules Obama claim of Russian economy in ruins.
RT.com January 21, 2015 10:43
Russia’s weapons chief has called the US president ‘a dreamer’ after Obama announced the Russian economy was “in tatters” in his State of the Union address.
“Obama has claimed that the Russian economy [is] in tatters because of the United States. Like he has torn us like a dog would tear a rag. What a dreamer,” Dmitry Rogozin wrote in his Twitter on Wednesday.
The statement was the first reaction of a senior Russian official - Rogozin currently holds the position of deputy prime minister in charge of the defense industry – to Barack Obama’s claim of US victory over Russia, made in Tuesday’s State of the Union address.
"Well, today, it is America that stands strong and united with our allies, while Russia is isolated, with its economy in tatters," the US leader said.
MP Frants Klintsevich, of the parliamentary majority party United Russia, has said that Obama’s statement revealed the true attitude of the US ruling elite towards Russia as well as America’s plans of global dominance.
“US President Barack Obama’s claim that thanks to US efforts Russia is isolated and its economy is in tatters shows the real colors of American ruling circles.This is exactly how they would like to see Russia,” the lawmaker was quoted as saying by TASS.
Klintsevich added that he didn’t think it a coincidence Obama made this statement at a historical moment, when Russia has found its place in the global political and economic system, understood its interests and learned to defend them. The politician advised all foreign leaders to come to terms with Russia’s opposition to US global dominance, noting that this stems from the Russian geopolitical position.
“From this point of view, it makes no difference if Russia is a socialist or a capitalist country, or if it follows some other economic model,” the MP noted.
“For many years our country obviously failed to perform as a counterbalance and as a result we now have what we have – a monopolar world.The situation has begun to change radically and the United States is obviously unhappy with this.”
Klintsevich concluded that Russia’s only possible reply to Barack Obama’s statement was to get over all the problems and become even stronger. “This also matches the long-term interests of our neighbors in Europe,” he said.
MP Mikhail Yemelyanov, of the leftist opposition party Fair Russia, told reporters that Obama’s claims of defeating Russia were simply attempts to cover up failures in US foreign policy. “The US president indulges in wishful thinking and exaggerated his victories at least twice during the speech,” Yemelyanov said.
The Russian MP thought the recent rapid devaluation of the ruble, which Obama took credit for, had been caused by various processes in the world economy as well as by mistakes of Russian financial officials who had allowed the US dollar to play too large a role in the Russian economy. Yemelyanov also said that the current difficulties and the urgent need for import replacement will eventually prove to be good for the Russian economy, because they will make the country stronger and more self-reliant.
Leading Russian senator Konstantin Kosachev commented that President Obama’s position could lead to total alienation between Russia and the West and that would be a major blunder by the US President.
“We survived through the 1990s when the situation was much worse. We did so without any external help. We will survive the current crisis and we will become stronger,” Kosachev wrote in a short statement published on the Upper House’s website.
“The winner will not be among those who pushed us when we were falling, but those who reached out a hand and supported us in difficult times. We can be grateful and we value any support. We were grateful to our allies in WWII,” Kosachev said.
“Today, they cannot have the alleged isolation of Russia which the US President reports as his personal achievement, but the loss of Russia to the West. And this will be the biggest strategic mistake during the whole post-Cold War period,” he added.
The downgrade of Russia’s credit rating by S&P is unreasonable, as the agency didn’t consider the country’s anti-crisis plan, and the strong economy with its large reserves and extremely low public debt, said Russian Finance Minister Anton Siluanov.
Siluanov says he does not think the move will lead to a sharp decline in the share of non-residents holding Russian bonds.
"A very important aspect is that the rating of Russian obligations in the national currency is still at the BBB- investment grade. Therefore, there won’t be a sharp decline in the share of non-residents among the holders of Russian loan bonds," he said.
On Monday the Standard & Poor’s international rating agency cut Russia’s sovereign rating to BB+, a ‘junk’ level, leaving it below investment grade for the first time in a decade.
But Russia’s finance minister said the S&P decision didn’t take into account the anti-crisis plan that was approved Monday.
The year-long anti-crisis strategy will put in place new structural reforms in order not to spend the reserves within 1-2 years. The government’s anti-crisis fund now stands at $2.6 billion (170 billion rubles).
Finance Minister Siluanov said the rating agency's decision will not lead to serious consequences, adding that there are no formal grounds for foreign investors to withdraw from Russian assets, as the issuer’s investment rating should be downgraded by at least two agencies for such a move to be reasonable.
"I believe the decision of the rating agency should not have a major impact on the further capital market, as the downside risks to Russian credit ratings have already been included into the prices of Russian assets by market participants," he said.
The minister suggests S&P’s decision shows 'excessive pessimism,' as the agency doesn’t take into account the strengths of the Russian economy, such as its huge international reserves, including sovereign wealth funds, the current account surplus and low government debt. Siluanov particularly considers 'groundlessly negative' the agency’s outlook on the surplus of current account positions.
The Russian Ministry of Finance together with other institutions will continue to talk with S&P and other rating agencies and provide them with macroeconomic data in order to improve the rating in the mid-term, said Siluanov.
Western rating agencies have been criticized for their alleged biased attitude and groundless decisions. S&P’s decision and those of other US-based agencies are nothing but political, Paul Craig Roberts, former US Assistant Secretary of the Treasury told RT.
“The Russian debt as percent of Russian GDP is 11 percent, which must be the lowest in the world. Per citizen, it comes to $1,645,” he said. “Now let’s look at the American situation. American debt as a percent of the US GDP is 105 percent – ten times larger. So, who should have their credit rating downgraded?”
Last week the US slapped a $77mn fine on S&P over fraud and banned it from assessing a segment of the commercial mortgage-backed securities market (CMBS) for a year because of ratings it issued in 2011 that regulators say were misleading.
Post by TsarSamuil on Jan 27, 2015 21:04:28 GMT -5
Russian PM vows ‘unrestricted’ response if banned from SWIFT payment system.
RT.com January 27, 2015 20:31
Russia’s response to a possible cut-off from the SWIFT international banking payment system will be “unrestricted,” Prime Minister Dmitry Medvedev vowed. The West is pushing for hitting Moscow with more sanctions as the Ukraine crisis deteriorates.
"We will see what happens, but of course if such decisions are made, I want to note that our economic reaction and generally any other reaction will be unrestricted," the Russian prime minister said on Tuesday, calling on the government to “work out concrete decisions which would help our economy in those conditions.”
Calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West, and the introduction of sanctions in response to Moscow’s alleged role in the Ukraine conflict.
Thus, last August the UK proposed to exclude Russia from the SWIFT system as a part of sanctions imposed on the country due to the situation in eastern Ukraine.
However, SWIFT has said it does not intend to switch Russia off from the system, adding that a number of countries have pressured it to do so. It has insisted it is not joining the anti-Russian sanctions.
In October, Belgium-based SWIFT stressed it has “no authority to make sanctions decisions.”
At the end of last year, Andrey Kostin – the head of VTB Russia's second largest bank – warned that in his “personal opinion,” excluding Russia from the global SWIFT banking transaction system is another form of sanctions and would mean “war.”
Back in December, Russia's Central Bank launched a new SWIFT-style payment service aimed at moving away from Western financial dominance.
The possibility of cutting Russia out of SWIFT, as well as a list of other anti-Russia measures, will be on the table during a meeting of EU foreign ministers on January 29. To be imposed, the new sanctions must be approved by all 28 EU countries.
SWIFT provides a network that enables financial institutions to send and receive information about financial transactions in a secure, standardized, and reliable way. SWIFT is a cooperative society under Belgian law and is owned by its member financial institutions. It has offices around the world. The system is comprised of over 10,000 financial organizations from 210 countries.
Speaking of the recent developments in Russia’s economy, the prime minister has called S&P’s downgrade of Russia’s credit rating a “political decision.”
“What is it if not a political decision?” he questioned. “We will of course go through this, but it is bad that in a whole it complicates the situation in the country and, honestly speaking, in the world,” Medvedev said.
Also on Tuesday, the prime minister signed a decree containing the main points of the government’s anti-crisis plan, press secretary Natalia Timakova said. The document will be published on Wednesday, when Medvedev plans to discuss details with regional leaders and members of the United Russia party.
Post by TsarSamuil on Jan 28, 2015 15:55:21 GMT -5
‘If SWIFT gets weaponized, an alternative system is absolutely realistic’
RT.com January 28, 2015 04:33
While the West may try to slap Russia with more sanctions, the SWIFT banking payment system will try to stay out of political crossfire, economist Max Fraad Wolff told RT, adding that if it eventually gets weaponized, an alternative will emerge.
RT: Do you think Russia will be blocked from SWIFT, or is this just an idle threat?
Max Fraad Wolff: So far it seems like it is mostly talk. But this has been threatened. We have seen it come up a few times. The rumor mill suggests it came up around comments by VTB Bank and the folks associated with that large Russian bank in and around Davos. Obviously the Russian sanctions were a major conversational piece in Davos most recently. And we have seen the escalation of sanctions.
However, that move – cutting of Russian banks from the SWIFT system, maintained out of Brussels – would make life significantly more difficult for Russian businesses around the world and would likely occasion a very stern response from Russian banks and possibly the Russian government.
RT: We have also heard talk about Russia and China last year discussing plans to launch their own international payment system, possibly as a rival to SWIFT. How realistic is that?
MFW: We have seen more and more agitation from folks who have either passive or long-term structural issues with various Western sanctions and/or Western arrangements, [and they are] discussing alternatives...whether that is discussing alternatives to Fitch, Moody's, or S&P out of the rating agencies, out of the Middle East, and in some cases out of East Asia, North Asia, out of Eastern Europe, out of most recently Russia and Chinese discussion – or hearing about an alternative to SWIFT.
Could you build an alternative interbank payment processing system? Absolutely. If SWIFT gets weaponized against anyone, particularity a large economy – Russia, China, something like that – we would be more likely see people accelerate.
The problem being that you don't want a lot of systems here. Interbank systems are vast when everyone has access to them because it is a universal mode of directional communication and you do more or less want everyone else to be on it.
RT: Prime Minister Dmitry Medvedev warned of a tough response if Russia is cut off. What kind of retaliation do you think he is referring to?
MFW: Well certainly Medvedev is speaking very aggressively there. But let’s be fair and honest here – if you are cut off from SWIFT, your ability to have any kind of normal business flow with the global commerce community is hampered. And so my guess will be that you’re going to see a huge response.
Part of what I think we’re seeing here is Russian authorities pushing back while folks sort of test a possible – what has been referred to, by the way, as the ‘nuclear option' – here. My guess is that cooler heads will prevail, that we won't see Russia cut off from the SWIFT system because it is in very few parties’ long-term interests.
And we should keep in mind two things: escalating sanctions, while it may make folks feel like they are retaliating for things they are upset about, do not actually have a great history of actually doing what folks want them to do. And they do have a history of hurting both the sanctioned and the sanctioner from an economic perspective.
RT: Back in October, SWIFT said it “will not make unilateral decisions to disconnect institutions from its network as a result of political pressure.” Is the neutrality of the system being undermined by political pressure from Washington and Brussels?
WFW: Sure. We’re seeing all kinds of political parties that want to stay out of these disputes and just be commercial and just make their various commercial way in the world by having as many users as possible. Seeing them sort of being shoved and bullied or pushed into these escalating fights, when you're seeing this as a sort of slow simmer that keeps getting the burner, the flame underneath the pot here keeps getting turned up by various retaliations and incidents and responses to incidents. So we’re seeing more and more, let’s call it, more or less neutral commercial apparatuses and parties pushed into the crossfire here. And that probably benefits just about no one in the long-term.
Post by TsarSamuil on Jan 31, 2015 20:07:46 GMT -5
‘SWIFT is archaic, doesn’t stand up to modern digital age’
Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.
RT.com January 29, 2015 12:33
In the short-term being removed from SWIFT would be a problem for Russia, but in the long-term it’s an archaic analogue system for payments which should be replaced by fully digital technology, Patrick Young, expert in global financial markets, told RT.
RT: Bank bailouts and refocusing budgets - do you think the newly-approved anti-crisis plan will help the Russian economy?
Patrick Young: Well, let’s put it this way. I mean rumors of the death of the Russian economy have been strictly exaggerated so far. There is no doubt there is a problem out there; we are looking at the possibility with oil prices where they are of two and a half possibly five percent retrenching in the economy, and recession during the course of this year. What’s come out today has been an initial offering; it’s a plan from Mr. Medvedev’s office which is trying to provide a degree of a security blanket, a cushion, perhaps a mattress if you want to think about it in this way, underneath the most important parts of the economy in order to keep the wheels of economic action still going. What we are looking at is something where there is not enough money to underpin every single aspect of the Russian economy, but significant critical aspects of it are going to receive support.
Therefore there is targeting towards banks, particularly larger banks that are lending to all aspects of the Russian ‘corpocracy’. We are also seeing some measures that are coming in to help smaller businesses like agriculture and so on. And also indeed because of inflation that’s been let loose recently there seems to be some increases in pensions, so that therefore the average Russian retiree is not going to be suffering too much hardship as the result. All around, net-net, this is a safety blanket; it’s something to try out a little bit of a smoothening to stop ruffling the feathers of the Russian economy and help things come to a balance.
RT: Just several days ago the S&P credit rating agency downgraded Russia's status to junk. The agency has faced criticism in the past. It was sued for fraud, accused of market manipulation and political bias.How much do international investors rely on these ratings in their decisions?
PY: The ratings agencies provide a standard bench mark indicator in order to help investors decide on what they are going to invest in. But at the same time what you’ve said is absolutely correct. Over the course of the last five or six years rating agencies have taken a buffeting. Part of this may have been a result of their own actions, they may have been too eager to try and give people that sort of ratings that they ultimately wanted, including, it has to be said, governments. Ultimately there has been a follow-through after the course of the property crushing.We are seeing at the moment rumors coming through perhaps indeed this agency S&P is going to settle for about 1.5 billion claims against them in relation to all of the US property issues of 2007-2008, the junk mortgage debacle and so on. But at the same time ironically the politicians were most apoplectic in Europe when the rating agencies had the temerity to downgrade their own ratings. Where does this leave Russia? Ultimately it was inevitable we were on the course towards seeing probably a junk rating for Russia once S&P and the other rating agencies put in place earlier maneuvers over the course of the last couple of months. What does it actually mean for Russia per se? Look, people know Russia is an emerging economy, it is therefore more speculative, and it is always going to be slightly more risky than a country with very little borrowing.
RT: There's an idea that - as part of a new sanctions package - Russia needs to be switched off from SWIFT, the global interbank payment system. Will the EU go that far do you think?
PY: Well, look at it in this way. SWIFT is at best the steam engine behind banking. It connects together many countries in the world, it is a cooperative system owned by banks. It has come under incredible political pressure in the course of recent times. We remember the Americans were actually manipulating the system to get data out of it after September 11, 2001 which caused all sorts of kerfuffles. SWIFT is being politically manipulated at the moment. The Americans want to try and turn Russia off and out of the banking system. In the short-term that would obviously be very difficult; it could mean we resort to carrying suitcases of cash over the Russian border. In the medium to long-term though we have to understand something:SWIFT is the analogue system for payments, it does not stand up to the modern digital age, it is an archaic system, and it is the problem at the core of the international banking system rather than the solution. And therefore as we have already seen talk is been abounding of possibly an intro Russian solution. The possibility that Russia and China may unite together. In the short-term being removed from SWIFT is political dynamite. In the medium to long-term SWIFT will be the loser because the modern payment technology - whether it’s the bitcoin blockchain or something else that’s fully digital - it’s going to take over from the old medieval knotted ropes of the analogue transistor payment system which is SWIFT.
MOSCOW, January 30 (Sputnik) – Israel is refusing to adopt the position that is being promoted by the US and UK: it does not want to support more anti-Russian sanctions and does not want to rewrite the results of the Second World War, Israeli publicist and political analyst Avigdor Eskin told Radio Sputnik.
Recently, Israel's Foreign Minister, Avigdor Lieberman, reiterated that his country won’t support any list of anti-Russian sanctions.
"The state of Israel is kind of a problematic place for Great Britain, because Israel doesn’t take any anti-Russian position today," Avigdor Eskin told Radio Sputnik.
"Israel was the victim of different international smear campaigns," he said. "As you remember, in the 1970s when the UN voted for the resolution 'Zionism is Racism', later this resolution was changed, but this rehabilitation took more than 15 years. Sometimes a certain international trend becomes fashionable and Israel is the last country which will forget what Russia did for our people to save the lives of the remnants of the Jewish community during WWII, and also in creating the state of Israel in 1948. Israel in principle will not support any sanctions of this sort, especially when it comes to Russia. It is absolutely final."
Domestic MasterCard: 5 Russian banks begin new National Payment System.
RT.com February 03, 2015 13:44
Russia’s new National Payment System is up and running. The first five Russian banks processed their initial payments via MasterCard on January 30, according to Russia’s Central Bank.
“On 30 January 2015, the first five banks, including regional ones, started processing some Russian domestic MasterCard card transactions via the National Payment System (NPS) processing center implementing settlements on these transactions via the Bank of Russia,” the bank said in a press statement Tuesday.
The transfer of Russian domestic transaction processing of international payment system cards to the NPS will be implemented in stages, and should be complete by March 31, 2015.
Although the bank’s statement didn’t list which banks were the first five to successfully process payments, previously it has been reported that Gazprombank, Rosbank, Alfa Bank, Bank Rossiya, SMP Bank, and Ural Bank for Reconstruction and Development were contenders to pioneer the flagship program.
The domestic step is the first to eventually developing an international payment platform.
Russia started an alternative to the SWIFT international payment clearing system in December amid worsening relations with the West. Moscow thought there was a threat the EU would order Russia removed from the global interbank SWIFT system, as it did with Iran in 2012 over the nuclear dispute.
MasterCard announced they would start processing payments in Russia through the National Payment System, and on December 30 signed an agreement. In late January, Visa and the National Payment System agreed a partnership, but haven’t yet signed a contract.
Russia’s crisis ‘short-term’ – head of China’s leading rating agency.
RT.com February 12, 2015 14:55
The economy of Russia is self-sufficient and sanctions won’t kill it, Guan Jianzhong Chairman of Dagong Global Credit told RT. Unlike most Western economies that are suffering from a debt “bubble,” Russia’s problems are caused by “outside hits.”
“Though it [the Russian economy – Ed.] has a lot in common with Western economies and the world economy as a whole, its crisis is connected not with domestic problems, but rather with outside hits,” Jianzhong said.
“To my mind, the crisis that Russia is facing now is short –term and not that significant. But countries with a huge government debt, or economies with average debt have crises caused by domestic factors and, compared to Russia, their problems are much more serious and will last longer,” he added.
Despite the fact that these economies resorted to such methods as quantitative easing in order to prevent recession the burden of their loans is still weighing, and they can’t solve this problem, he said.
“Therefore, I believe that Western sanctions cannot fundamentally undermine the Russian economy,” he concluded. “Especially after Russia embarked on a strategy of ‘turning to the East’, the development of economic ties with China and other Asian countries will it help survive the crisis.”
The ratings agencies had no grounds to lower Russia’s rating, as its economic environment isn’t a reason, Jianzhong said, referring to S&P cutting Russia’s rating to ‘junk’ status.
“In our assessment we mostly relied on the fact that although the sanctions did have an effect on the Russian economy, they didn’t influence its ability to repay its debt," said Jianzhong. “The Russian authorities can pay off their debts perfectly well.”
Dagong Global gave the country an A rating, while the American-based Standard and Poor's downgraded it to ‘junk’.
In January, Russia and China announced they would create a jointly-owned rating agency to rival those in the West by the end of the year.
This week the Russian State Duma received a draft bill from the Ministry of Finance that puts together a framework for the activity of foreign rating agencies in Russia.The bill proposes fees and accreditation for carrying out such financial activities.
‘Big Three’ caused ’08 crisis
Jianzhong says the ‘Big Three’ of S&P, Moody’s and Fitch aren’t able to give an impartial assessment of a country’s real economic environment which, in turn, leads to miscalculation and crises.
“The global credit crisis of 2008 occurred because of their miscalculations. During US congressional hearings in 2008 they openly admitted they made a serious mistake,” Jianzhong said.
"The Department of Justice has recently penalized S&P, also for making a mistake. Studies by Dagong have shown that the ‘Big Three’s’ methods of discussion and assessment are wrong,” he said.
“Now the whole world is experiencing the impact of the global crisis, which occurred due to their miscalculations."
For a long time the West’s biggest rating agencies have given the USA and some European countries the highest AAA ratings, seriously overestimating their real potential to repay debt. In Jianzhong’s opinion, the value of these countries’ debt is greater than the value of the goods they create.
“The US credit rating is now A-, they have the largest debt burden worldwide, and if the dollar wasn’t an international reserve currency, America wouldn’t be able to pay its creditors,” he said.
The rapid growth of global debt that started in 2007 had a negative impact on the world economic development. It showed that the growth of the global economy is based on a huge loan "bubble", which was the main driving force for the world economy, said Jianzhong. “At a certain point, the bubble burst and thus started the global credit crisis - the world economy has lost its support.”
According to Jianzhong, if nothing changes, the world can easily face a similar crisis in the near future.
“At the moment we are confident that one can no longer use the model of economic development based on a continuous growth of loans, it is extremely dangerous.”
Post by TsarSamuil on Feb 20, 2015 13:18:54 GMT -5
Visa joins MasterCard localizing Russian payments.
RT.com February 20, 2015 10:46
The Visa international payment system, which has the biggest share of the Russian market, will process domestic payments through Russia’s newly created National Payment System.
“On 18 February 2015, JSC NPCS and VISA Payment System LLC concluded a bilateral agreement on operating and clearing services on domestic VISA payment system card transactions to be provided by the NPCS [National Payment Card System – Ed.] processing center,” the Central Bank of Russia (CBR) said Thursday.
The transfer of Russian domestic transaction processing to NPCS will be implemented in stages, and should be complete by March 31, 2015.
Russia stepped up its effort to become more financially independent after both Visa and MasterCard, which together have more than 90 percent of the market, disrupted operations in Russia. MasterCard and Visa suspended service to Russian banks in Crimea as part of US sanctions over the Ukrainian crisis.
In January MasterCard signed a similar agreement along with five Russian banks, including Gazprombank and Bank Rossiya, and started to carry out card transactions via the NPCS processing centre and settling through the Bank of Russia.
Processing localized transactions is one of the principal terms for Visa and MasterCard to become nationally important payment systems in Russia. Such a status relieves Visa and MasterCard from paying a security fee to the Central Bank, which would have cost the two payment systems $3 billion, according to estimates by Morgan Stanley.
In December the Central Bank announced a move to an alternative international payment clearing system to the SWIFT global system of interbank payments, as relations worsened with the West. Russia feared the West might cut it off from the SWIFT system as part of sanctions.
However, SWIFT said it wouldn’t bend to EU pressure and close services in Russia.
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