The main currency depository in Russia is the National Clearing Center (NCC), a division of the Moscow Exchange.
The little-known business, which is still not on the list of the U.S. and EU sanctions, has emerged as Russia’s primary source of foreign exchange. Bloomberg, citing people close to the Moscow Exchange structures and the Russian authorities, describes the new quality of the NCC.
The NCC, according to the agency, has developed into a crucial bridge between Russia and other countries. The NCC still processes all currency payments for oil, gas, and other resources, making Mosbirzha a conduit for billions of dollars and euros. Additionally, the NCC has emerged as a rival to numerous institutions that are no longer able to conduct foreign transactions due to Western sanctions.
Since banks, businesses, and even people were obliged to reinsure themselves due to the freezing of foreign exchange reserves, the Chinese yuan and other currencies of “friendly” states have replaced dollars and euros as the NCC’s primary currencies. According to sources, money received in dollars, euros, and other “risk” currencies is immediately converted into renminbi or other currencies that do not run the risk of being sanctioned. Smaller banks that can still utilize the SWIFT system and have not been subject to sanctions are seeing a similar pattern.
“Because it can still conduct transactions in dollars, the NCC services bank and its clients’ transactions despite having no money of its own. Most of the currency positions were transferred into yuan when word of the sanctions against the NCC spread “The agency was informed by Oleg Vyugin, a former head of the Moscow Exchange Supervisory Board who resigned from his position in the summer of 2022.
According to the journal, because some of the restrictions were supposed to do just that, the failure to isolate Russia from international currencies has irritated certain American and European leaders. The agency claims that it is impossible to estimate the total flow of currency through the NCC, but data on Russia’s foreign exchange reserves provides an indirect estimate; according to Bloomberg, the Russian government has raised about $100 billion through oil and gas revenues, increasing its foreign exchange reserves.
According to the CIA, this money entered the Central Bank’s accounts specifically through the NCC, meaning that the “subsidiary” of Moscow Exchange assists in evading Western sanctions. The last two quarters, when energy prices were almost at local highs and the trade balance was favorable and set new records, were particularly fruitful for Russia, The Insider reports.
The Central Bank started warning brokers, banks, and other financial institutions about the dangers of making payments in foreign currency and even storing foreign money in their accounts in the summer out of concern for the prospects of the NCC. Additionally, the regulator was getting ready to impose sanctions on the NCC, which might have halted currency trading on the Moscow Exchange and had a significant impact on the entire financial system.
In light of this information, banks and other financial institutions started to “squeeze” currency, which meant creating storage conditions for foreign cash that were intolerable to many clients. The Central Bank even considered creating a system that would mimic stock market trading and represent the current value of the ruble. Sanctions against the NCC, however, have not yet been implemented.