The Central Bank clarified Putin’s decree on the suspension of foreign exchange transactions for banks that fell under the sanctions

The decree of Russian President Vladimir Putin on the suspension of foreign exchange operations of Russian banks on the accounts of legal entities applies only to those credit institutions that will fall under sanctions after August 8, the Bank of Russia reported.

The regulator stressed that banks are already discouraging savings in “unfriendly” currencies, and the decree only creates additional incentives for this.

On Monday, the Kremlin issued a decree allowing sanctioned Russian banks not to conduct transactions in the currency of unfriendly countries, credited to the accounts of legal entities from August 8, if this is not possible due to the restrictions imposed.

“The rules on the suspension of the fulfillment by banks of their obligations to customers in foreign currency, which are contained in the decree, apply only to legal entities and individual entrepreneurs (IP). Moreover, we are talking about obligations only for those funds in foreign currency that can be deposited and accounts of companies or individual entrepreneurs after the decree comes into force (after August 8). That is, transactions with “new” money can be suspended. And only in those banks that fall under sanctions after the decree comes into force, “the Central Bank explained to journalists.

It is noted that the introduction of such measures is aimed at encouraging businesses not to keep money in banks in “toxic” currencies, not to accumulate foreign currency balances on accounts.

“Because of the fact that their correspondent accounts are blocked due to sanctions and the balances of funds on them are frozen, banks cannot fulfill their obligations to customers in the currency that is frozen. Banks are already making efforts to ensure that legal entities and Individual entrepreneurs transferred funds in the currencies of unfriendly countries into rubles or into friendly currencies, and the decree creates additional incentives for this.If a company or individual entrepreneur decides to keep money in toxic currencies, then such clients will share with the bank the risk of freezing funds,” the regulator concluded .

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