Russia’s central bank reveals how it prepared for Western dollar seizure – RT Business News

Moscow has been hoarding gold, yuan and foreign currency in cash to offset Western sanctions, regulator says

The Bank of Russia had been preparing for an escalation in Western sanctions since 2014 and building additional funds to guard against future restrictions on its foreign exchange reserves, the regulator revealed on Wednesday.

Amid “Growing geopolitical risks” the central bank has accelerated investment in assets “which cannot be blocked by hostile nations” and transferred some of its gold, Chinese yuan and foreign currency reserves into cash, the regulator said in its annual report.

The central bank managed to stash billions of imported dollars “in volumes limited by logistical capacities”, says the report without specifying the amount of accumulated funds. Alternative reserves of dollars and gold bullion were stored in the vaults of the Bank of Russia.

“This safety cushion was created in the form of alternative reserves – less liquid and practical on a day-to-day basis, but more reliable in the face of a difficult geopolitical scenario”, explains the regulator.

It was impossible to abandon dollar and euro reserves, as these currencies were used for settlements in international trade as well as in the domestic financial sector, the central bank added.

“Therefore, the structure of foreign exchange reserves should take into account the needs of citizens and businesses,” concluded the regulator.

The central bank could have “dump” part of this money to the banks during the first wave of Western sanctions to stabilize the Russian banking system and compensate for the withdrawal of dollars and euros in “panicked depositors” believes the chief analyst of Ingosstrakh-Investment, Viktor Tunyov.

According to some estimates, nearly $20 billion was withdrawn last year by depositors at the country’s second largest bank, VTB, alone.

In 2022, Russia was hit with sweeping Western economic sanctions, which included measures to cut Russia’s central bank off from the international financial system, while around $300 billion of the bank’s foreign exchange reserves were frozen. Moscow criticized the seizure of his assets, saying it constituted theft.

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