Demand for the yuan in Russia has increased since February 24, when Russia sent tens of thousands of troops to Ukraine and the West imposed sanctions on Moscow, limiting its access to the dollar and euro markets. .
Sanctions imposed on major Russian banks, including the state-controlled VTB, have effectively cut off creditors from the global financial system.
“The new reality is leading to a massive rejection of the use of the dollar and euro in international payments,” VTB CEO Andrei Kostin said in a statement.
“The launch of the yuan transfer system will greatly simplify the work of Russian companies and individuals with their Chinese partners, thereby increasing the popularity of the yuan in our country,” he added.
VTB said the maximum amount for a single money transfer is equivalent to 20 million rubles ($328,677) and the maximum monthly limit is set at 100 million rubles. The bank plans to start lending in yuan and other non-Western currencies later this year.
Russia’s biggest creditor, Sberbank, said on Tuesday it had already started lending in yuan as Moscow sought to develop its financial infrastructure in countries that have not imposed sanctions on it.
VTB’s Kostin also said there was a need to develop payment systems as an alternative to SWIFT, from which VTB was disconnected in March.
Western authorities withdrew major Russian banks from SWIFT after Moscow embarked on what it calls a “special military operation” in Ukraine, which began on February 24.
The sanctions increased the use of Russia’s SWIFT alternative, the Financial Message Transfer System (SPFS), which was developed by Russia’s central bank.
($1 = 60.8500 rubles)