Nabiullina: Russian Central Bank ready to discuss idea of paying foreigners with special bonds linked to frozen assets of Russian Federation

MOSCOW. April 20 (Interfax) - The Central Bank of Russia (CBR) is ready to consider the idea of paying departing non-residents with special bonds tied to the frozen assets of the Russian Federation; however, there are a number of nuances in the matter, and the topic requires additional discussion, Central Bank Governor Elvira Nabiullina said at a plenary meeting of the State Duma.

LDPR deputy Vladimir Koshelev proposed paying non-residents exiting the Russian market with special bonds tied to the frozen international reserves of the Russian Federation. Koshelev believes that the measure could stabilize the exchange rate, as well as reduce volatility on the forex market, which is fundamentally important for Russian businesses.

"You submitted this proposal just at the time of the meeting with the faction. We have managed in a very short time to see how this initiative could be treated. It needs to be developed further, though the initiative could be considered in principle as one of the measures to protect Russian assets frozen abroad," Nabiullina said.

Nabiullina noted that several circumstances would need to be taken into account. First, tying bonds to frozen assets could lead to disclosure of information about the structure of international reserves. "We would not want that," she said.

Secondly, it is unlikely that it would be possible to impose these bonds on non-residents, moreover, to force foreign regulators to unfreeze assets, even if their citizens own the bonds, Nabiullina stressed.

According to Nabiullina, the mechanism for special bonds could be considered as an alternative to type "C" accounts.

"Someone could wish to let the grass grow under their feet, as the saying goes, until the funds from type 'C' accounts are unfrozen; and someone could go for the scheme, though this requires discussion," Nabiullina said.

Moreover, there is the matter of the CBR's immunity regarding its property. "Despite the freeze, the jurisdictional immunity of the CBR's assets has not yet been challenged. The question, of course, is what the CBR would receive in return," Nabiullina said.

"We are ready to discuss the topic in detail, and we are interested in finding and working out various options for resolving the matter of the frozen assets," Nabiullina stressed.