“Two state energy companies, gas producer Gazprom and its oil arm Gazprom Neft, said they would use more Chinese currency in trade, while Russia’s largest bank, Sberbank, has also promoted the use of the yuan,” The Moscow Times’ Peter Hobson writes.
“The Russian Central Bank said it was working to create a new funding instrument in yuan, and the Finance Ministry said it was considering issuing debt in the currency.”
Gazprom Neft announced that it began settling shipments of oil to China in yuan. And previously, the head of Gazprom, Alexey Miller, said in a TV interview that the company was negotiating with China to use yuan and rubles for gas deliveries via a planned pipeline in Western Siberia.
“Gazprom Neft’s swift embrace of the yuan was likely spurred by sanctions, not profits,” Alexei Devyatov, chief economist at UralSib Capital, told The Moscow Times.
Additionally, “Western banks work slower, with more restrictions, and it becomes simpler to move to the currency in which trade is being done,” Vladimir Pantyushin, senior strategist at the investment bank Sberbank CIB, told The Moscow Times.
In other words, Russia is looking to diversify away from the Western financial system after repeatedly being targeted by US sanctions.
When the paper tiger collapses, what will Russia do?