Russian banks are opening retail yuan accounts as China eyes a chance to dominate the country’s economy.
Russia’s second-largest bank, VTB Bank, has started offering a Chinese yuan savings account with an interest rate of up to 8%, hailing the currency as “one of the most affordable and to invest funds” after the country was hit by Western sanctions.
A number of other Russian banks are now planning to open yuan settlement accounts and deposits, according to a Russian newspaper Kommersant reported Wednesday.
The move comes days after it emerged that a series of Russian lenders, including Sberbank and Alfa Bank, were planning to use China’s UnionPay system to supply customers’ bank cards after Visa and Mastercard boycotted Russia in response to his invasion of Ukraine.
UnionPay is China’s leading payments processor, but has a small market share outside the world’s second-largest economy.
There are fears that Russia’s exclusion from international financial systems could lead it to support rival systems with the help of China, one of the few countries that could help Russia soften the impact of harsh sanctions.
The European Union this week urged Xi Jinping, the Chinese president, to put pressure on his “friend” Vladimir Putin to end the war in Ukraine on Monday.
Chinese Foreign Minister Wang Yi said that while Beijing would arrange aid to Ukraine, the “friendship” between Beijing and Moscow was “rock solid”.
Australian intelligence chief Andrew Shearer, director general of the Office of National Intelligence, warned on Wednesday that a “troubling new strategic convergence” between Beijing and Moscow had developed and the risk of “great power conflict” had increased since the invasion of Ukraine.
However, Russians are currently facing a shortage of smartphones as Chinese manufacturers have started cutting shipments to the country following the collapse of the rouble.