VTB said on Tuesday it had become the first Russian bank to launch money transfers to China in yuan without using the international messaging system SWIFT that underpins financial transactions globally.
Demand for the yuan in Russia has increased since Feb. 24 when Russia sent tens of thousands of troops into Ukraine and the West imposed sanctions against Moscow, limiting its access to the dollar and euro markets.
The sanctions on major Russian banks, including state-controlled VTB, have effectively cut lenders off from the global financial system.
“The new reality is leading to a massive rejection of the use of the dollar and the euro in international payments,” VTB CEO Andrei Kostin said in a statement.
“The launch of the yuan transfer system will significantly simplify the work of Russian companies and individuals with Chinese partners, increasing the popularity of the yuan in our country,” he said.
VTB said the maximum amount of a single money transfer was equivalent to 20 million roubles ($328,677) and the maximum monthly limit is set at 100 million roubles. The bank is planning to start lending in the yuan and other non-Western currencies later this year.
Russia’s largest lender, Sberbank, said on Tuesday it had already started lending in the yuan, as Moscow looks to develop its financial infrastructure in countries that have not imposed sanctions against it.
VTB’s Kostin also said there was a need to develop payment systems as an alternative to SWIFT, which VTB was disconnected from in March.
Western authorities removed major Russian banks from SWIFT after Moscow embarked on what it calls a “special military operation” in Ukraine that started on Feb. 24.
Sanctions have increased the use of Russia’s SWIFT alternative, the System for Transfer of Financial Messages (SPFS), which was developed by Russia’s central bank.
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