Russian financial policies may mitigate sanctions

Significance

Russian policymakers are capitalising on underlying strengths such as high reserves, low sovereign debt and oil exports as they shape measures to mitigate existing and potential new Western sanctions. The central bank has played a critical role in maintaining macroeconomic stability in the face of sanctions; recent actions include adjusting international reserves to reduce exposure to sanctions risks, liquidating US-based assets and building up gold reserves.

Impacts

• Possible shortfalls in new bond issuances will not have a major impact on budget execution.
• Banking system 'de-dollarisation' will grow following July's higher reserve requirements for foreign-currency-denominated assets.
• The National Payment Card System, used for all domestic electronic payment instructions, will be integrated with systems in China and Iran.