Russia's top banker rings alarm bell as China economic crisis to rock Putin's finances
Russia has become heavily reliant on China since the invasion of Ukraine triggered a swathe of sanctions against Moscow and top allies of Vladimir Putin.
Russia's top banker has warned Vladimir Putin might be left without the economic support he needs as China faces growing pressure to limit its transactions with Moscow.
Beijing has been facing major economic issues in recent months as it struggles with recovering from the coronavirus pandemic as well as with a persistent housing sector crisis.
To avoid exacerbating its financial woes, China has been forced to comply with US sanctions imposed on Putin and his regime as it curtailed access to Chinese currency.
The governor of the Central Bank of Russia, Elvira Nabiullina, warned payment issues remained a key challenge the Russian economy would need to cope with.
Nebula told reporters that the institution is now preparing for multiple threats to its operations, including the prospect of suspending exchange trading in yuans.
Russia was cut off from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) banking system within weeks of the invasion of Ukraine.
The decisions pushed Moscow into becoming heavily reliant on the Chinese country to continue conducting business.
But as China's own financial problems persist, several state-owned banks tightened their rules on funding Russia-based businesses.
The move came in response to Washington DC warning it would impose hefty sanctions on foreign banks found to be providing cash to Russian businesses with clear links to the defence industry.
Nebiullina said that Russia is taking "all the risks into account" but maintained the country still has external financial ties it can rely on as it continues to export its oil and natural gas.
Addressing the press in St Petersburg, she said: "Risks of complete financial isolation may occur only if the global market does not need our export goods.
DON'T MISS:
Putin's plot to 'stoke existential fears' in US to secure Ukraine win exposed [ANALYSIS]
Russian oil depot explodes into huge fireball after humiliating drone attack [VIDEO]
Xi in 'desperate' bid to woo global investors as hostile tactic backfires [ECONOMY]
Russia: Vladimir Putin shakes hands with Xi Jinping
"Payments are made while they are needed, and economic entities in many countries need our market; the economic interest is in place."
Last month, the Russian division of the Bank of China suspended operations with Russian lenders subjected to US sanctions to avoid potential retaliation from Washington, according to Russian business newspaper Kommersant.
The division is the second-largest Chinese banking subsidiary operating in Russia with an estimated £5.2 billion in assets.
An anonymous sector insider told the publication: "This is not very good news for the Russian market
“There will be additional costs both in time and the price of processing payments. But the most important problem is that payments go beyond the banking sector, resulting in the state having less control."
Reuters reported, however, that Putin had negotiated the creation of an alternative payment challenge to allow Moscow to "fly below the US sanction radar" during his visit to Beijing in May.
