Recently, the news that Western banks have fiercely condemned Russia and given their assets to Russia at a low price has attracted widespread attention. To understand the ins and outs of this, we need to review the context of the Russia-Ukraine conflict. The United States and Western countries have launched comprehensive sanctions against Russia, especially in the financial sector. However, after all, banking business cannot be withdrawn directly, so many banks are faced with the problem of being unable to achieve huge assets. These assets can be divided into two parts, one is the equity of the US Western banks in Russia, and the other is the arrears of Russian companies to the US and Western banks. According to statistics from the Bank for International Settlements, Russian companies of all types have debts to Western banks in the United States and more than $121 billion. Negotiations stalled after Russia offered to buy the assets at a low price. Recently, with the development of the conflict between Russia and Ukraine, Russia has forcefully put forward conditions that are unacceptable to Western banks in the United States, which has triggered strong dissatisfaction and condemnation from Western banks. And more importantly, Russia's actions are also related to the status of the yuan.
Over the past year or so, Russia has been exporting various products to China, in addition to military equipment such as **, in many other areas. As a result, Russia's ** deficit with China quickly widened to 251.4 billion yuan, an increase of 223 times. With its heavy debts, Russia is in dire need of yuan and other foreign exchange reserves. However, in recent years, the exchange rate of the Russian ruble has been very unstable, resulting in a large number of Russians exchanging their savings for ** yuan. Faced with this situation, Russia has taken a series of measures after the outbreak of the Russia-Ukraine conflict last year, including setting the interest rate on the yuan at 25%, while other foreign exchange rates are negative. This move has led to a continuous reduction in the currency held by Russia in the form of foreign exchange reserves. Russia can also gradually deprive Western banks of their assets and make them non-performing if they do not ** their assets on Russian terms. Moreover, if Russia wins on the battlefield in Ukraine and becomes the stronger side, they may even directly devour these hundreds of billions of dollars in assets. In fact, in Russia, in addition to banks, the assets of American and Western companies are also being nationalized at extremely low levels.
In the negotiations with Russia, US and Western banks are facing huge losses. Long before Russia launched the war, these banks were already under the pressure of operating difficulties. Now, under the dual pressure of the Russia-Ukraine conflict and Western sanctions against Russia, the situation of these banks has become even more difficult. First of all, Russia** has made it clear that it will nationalize the country's financial markets and sell off the assets of American and Western banks. In a market economy, any sudden ** of any asset will lead to *** Secondly, the exchange rate of the Russian ruble is constantly fluctuating, which exposes these banks to great risks in the valuation of their value. In addition, due to the economic depression caused by the war, Russian businesses are constantly facing difficulties and loans are depreciating, which further increases the losses of banks. As a result, these banks have had to consider reducing their losses by selling their assets at low prices.
The renminbi played a key role in the whole affair. Since Russia is in dire need of the yuan and at the same time lacks other foreign exchange, they have taken a series of measures to promote the use of the yuan. On the one hand, Russia has imposed a higher interest rate on the renminbi to encourage people to exchange their savings for ** yuan. Russia, on the other hand, uses its foreign exchange reserves to buy yuan in order to increase its own RMB reserves. In this case, the yuan has become a powerful bargaining chip for Russia. They can threaten to liquidate the assets of Western banks and gradually deprive them, and if necessary, even directly devour them. This situation has put Western banks under tremendous pressure to negotiate and may eventually accept a low-cost Russian offer.
This incident showed that war is not beneficial for either side. Although it may seem that Russia has lost huge assets, in reality Western banks and companies have also suffered huge losses in Russia. Even in the era of globalization, the economic ties between countries remain complex and interdependent. This incident also reminds us that when international tensions escalate, banks and corporates should proactively avoid possible risks in order to reduce operational difficulties.