Miscellaneous News

[vincent]

As for keeping Rubles in Russia's current account, I assume it's referring to the BIS; in which case it makes no sense at all. If foreign countries need to buy rubles to pay for Russian exports, they would do so either through other countries with excess rubles to sell or buy from Russian central banks via commercial banks. If it's through the Russian central bank, it can simply "print" rubles and in turn earn foreign currencies which can be used to pay for imports or buy foreign assets. The "printing" in this case is supported by the exporting so it's not inflationary. There's no need to keep rubles in its current account as reserves.

Actually your idea is not that great because fiat currencies from Western countries are next to worthless to Russia. The USD, Euro, Yen, etc Russia Central Bank receives are of little use because of the sanctions. All the new Rubles will flow back to Russia as payment for the fossil fuels and will lead to inflation because of the extra money supply, unless the Russia central bank soak them up.

Another method for countries to get Ruble/RMB is to issue bonds in Rubles/RMB and are bought by Russian/Chinese Central Bank. Russia and China will be providing other countries fiat moneys to buy their products (fossil fuel from Russia and consumer and industrial good from China). Same as above, the result will also be inflationary because the new money will go back to Russia and China, unless their central banks use money market operations to soak up the extra liquidity.

 

[jwnz]

Actually your idea is not that great because fiat currencies from Western countries are next to worthless to Russia. The USD, Euro, Yen, etc Russia Central Bank receives are of little use because of the sanctions. All the new Rubles will flow back to Russia as payment for the fossil fuels and will lead to inflation because of the extra money supply, unless the Russia central bank soak them up.

Another method for countries to get Ruble/RMB is to issue bonds in Rubles/RMB and are bought by Russian/Chinese Central Bank. Russia and China will be providing other countries fiat moneys to buy their products (fossil fuel from Russia and consumer and industrial good from China). Same as above, the result will also be inflationary because the new money will go back to Russia and China, unless their central banks use money market operations to soak up the extra liquidity.

USD, Euro, Yen are still useful to Russia for using them to buy goods and services offered by countries that still trade with Russia, as those countries accept and can use the G7 currencies. Obviously though, holding other foreign currencies as reserves other than G7 ones is preferred.

Anyway, my point is that it doesn't make sense at all for Russia to hold Rubles as reserves.

Damn it, I broke my promise...

 

[gelgoog]

Most Russian banks, at least the largest ones, cannot use SWIFT to transfer money in USD, Euro, or Yen. The Russian Central Bank cannot hold foreign currency accounts in those currencies either. I think the only reasonable way is for Russia to increase its hard assets be it gold, palladium, platinum, or whatever.

 

[jwnz]

Most Russian banks, at least the largest ones, cannot use SWIFT to transfer money in USD, Euro, or Yen. The Russian Central Bank cannot hold foreign currency accounts in those currencies either. I think the only reasonable way is for Russia to increase its hard assets be it gold, palladium, platinum, or whatever.

Are you sure? I'm not aware of that the Russian Central Bank account in BIS has been frozen. Happy to be stand corrected though.

As for SWIFT, there're enough Russian banks that can still access it, Gazprom is one. Which is why Putin mandated all gas payments must be paid in Rubles via buying Rubles through an account that can't be sanctioned by the West, so Russia can still have access to foreign currencies.

 

[Temstar]

Guess what?

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India getting the hell out of IPEF, that Indo-Pacific strategy looking a bit shaky.

 

[Shadow_Whomel]

Are you being a bit premature about Chinese are coming? Li's statements are not very different from what Chinese government has been saying since beginning of the war.

There are media reports of Xi meeting Putin next week in Uzbekistan as Xi's first trip oversea since the covid outbreak. But Chinese MFA didn't confirm the trip when asked in its daily briefing.

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Let's not take measures without considering changes in circumstances. When the West claimed support for Ukraine at the beginning of the war we only saw shoulder-launched rocket launchers, now what? The West's claimed support has become tanks, artillery and armored vehicles. It is not in China's interest for Russia to fail quickly, nor is it in China's interest for Russia to have to delay this war for very long. China's assistance has never been conspicuous. Previous support has included providing drones and bridge-building tools to East Ukraine, so what about now, when the West is once again looking to escalate military aid? It is likely that they have agreed to help Russia to ensure and even improve the productivity of product 305. And the supply of chips is entirely claimable for civilian use.

 

[texx1]

Let's not take measures without considering changes in circumstances. When the West claimed support for Ukraine at the beginning of the war we only saw shoulder-launched rocket launchers, now what? The West's claimed support has become tanks, artillery and armored vehicles. It is not in China's interest for Russia to fail quickly, nor is it in China's interest for Russia to have to delay this war for very long.

Chinese government's official position on the current Russian invasion has been neutral all along. China is unlikely to change that since providing military equipment to Russia would risk massive US sanctions and asset seizure. I don't expect this to change even after Putin Xi meeting.

China's assistance has never been conspicuous. Previous support has included providing drones and bridge-building tools to East Ukraine, so what about now, when the West is once again looking to escalate military aid? It is likely that they have agreed to help Russia to ensure and even improve the productivity of product 305. And the supply of chips is entirely claimable for civilian use.

When did Chinese government supply drones to Russian arm forces or the separatist forces? Russia wouldn't be buying UAVs from Iran if China was willing to supply them.

In case, you were referring to commercial DJI drones Ukrainian purchased off the internet, that's not a transfer of arms by China. Besides DJI has suspended sales in both Russia and Ukraine since April for fear of US sanctions.

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In fact, DJI is so sensitive about its drones being used in this conflict; it issued a statement disavowing military use and reemphasizing its civilian use nature when Russian embassy in China praised DJI drones on weibo.

Russian embassy in China praising DJI drones have revolutionized artillery warfare.




DJI's response

 

[Jianguo]

I think there's confusion on what are considered money printing, current account, reserves, etc.

Central banks do "print money" all the time as in increasing money supply and reducing it as well to support and match economic activities. This is done between a central bank and commercial banks, one method is by changing the bank reserve requirements, so banks can increase or have to reduce the amount of lending on their books, hence changing the money supply, another means is to change the interest rates. These actions usually are not inflationary as they are carried out to match money supply to support the underlying economic activities.

When people talk about money printing or QE though, that's when a central bank issues new money to buy govt bonds to support govt spending when tax income is not enough, that's usually inflationary.

As for keeping Rubles in Russia's current account, I assume it's referring to the BIS; in which case it makes no sense at all. If foreign countries need to buy rubles to pay for Russian exports, they would do so either through other countries with excess rubles to sell or buy from Russian central banks via commercial banks. If it's through the Russian central bank, it can simply "print" rubles and in turn earn foreign currencies which can be used to pay for imports or buy foreign assets. The "printing" in this case is supported by the exporting so it's not inflationary. There's no need to keep rubles in its current account as reserves.

Note: this is my last post in this matter as I'm sure readers of this thread have had enough of economics 101 already

Only the US dollar acting as the global reserve currency can print money with little effect on its inflation. This of course is being eroded but it is still the case. In the case of Russia, they cannot simply print money without exacting inflation. This might not be immediately apparent in the case of trade flows but it does affect the currency value relative to other currencies over time.

I think you might be referring to my use of the words "account surplus" somewhere and related this with foreign currency reserves or some other relationship since you mentioned the BIS. I was referring to the surplus from their oil and gas trade and how it is saved as Rubles. That trade as it pertains to the Ruble, is circular in nature because the extraction, processing and transport of gas/oil begins in Russia with Rubles, traded in Euros and US Dollars and is exchanged back to Rubles. That surplus saved as Rubles is basically like a budget surplus in Russia that like I said is similar to a worker saving their salary for a rainy day.

 

[coolgod]

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Chinese president to attend SCO summit, visit Kazakhstan, Uzbekistan
Xi visiting Kazakhstan should be something very big related to BRI, considering this visit was announced almost a year ago.

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The BRI was announced by Xi in Kazakhstan in Sept of 2013, this seems like a big announcement on the 9th anniversary.

 

[SteelBird]

India to support US-proposed price cap on Russian crude oil only if supplies from Venezuela, Iran assured​

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Oil cap means no oil that's why India is worried and wanna to assure oil resource, no matter it's from.