11 Aug 2023 09:56

Some Persian Gulf countries open to hosting alternative depository hub - VTB head

MOSCOW. Aug 11 (Interfax) - Certain Persian Gulf countries have expressed a willingness to host an alternative international settlement and depository hub, the creation of which was previously proposed by Russian state bank VTB .

"We are also promoting the idea of creating a settlement and depository hub to replace Euroclear. As is known, Euroclear has compromised itself, having frozen huge amounts of funds, including of Russian citizens. But many countries, we've spoken with several Persian Gulf countries, are prepared to host such hubs in order to create an alternative. And this is not directed against anyone, it's just an alternative option that will not have any political, any other constraints," VTB head Andrei Kostin said at a meeting with President Vladimir Putin.

Kostin first called for the creation of an alternative international settlement and depository hub at the Bank of Russia's Financial Congress in early July. This point was included in the program to create a parallel system of international settlements and financial market infrastructure developed by the bank.

"We have all faced the problems of Euroclear and Clearstream. [...] We believe a center for the transactions of a new financial depository could be located in a Persian Gulf country given the concentration of big capital in this region," Kostin said at the time.

Central Bank chief Elvira Nabiullina backed the idea. "As for the creation of a regional, international depository hub, it seems to me that this is a very good idea. The specifics need to be discussed with the market and with partners to see if there is interest in the creation of this hub and what it might entail. But the ideal, in my view, is very productive for further elaboration. Specifically for the development of the international capital market," Nabiullina said.

At the meeting with Putin, Kostin also said that there has been active development of bilateral settlements between countries in recent months. "We know that the largest countries of Asia, such as China, India, Indonesia, and Arab countries, particularly the Persian Gulf, Saudi Arabia, [...] in Africa these processes have begun, and African countries are starting to settle accounts among themselves in national currencies and, what's important, are creating new infrastructure," he said.

"Specifically, systems are emerging in place of SWIFT that are replacing it and are being created by these countries themselves. I think that one of our objectives today is to combine these systems, because everyone has developed their own - the Chinese have, the Indians have and we have - but it's important that they be able to work with one another. I think that this is a very important point," Kostin said.

With the development of digital technologies, specifically the introduction of digital currencies, next year there will be a "rapid transition to settlements in national currencies in countries that we call the Global South, meaning developing nations, nations that are currently friendly toward us," Kostin said.