Settlements in national currencies of Asia -

Settlements in national currencies of Asia

(Automatic translation)
Settlements in national currencies of Asia

East vector: calculations in Asian currencies

According to the Federal Customs Service of Russia for 9 months of 2017, Russia's foreign trade turnover with the countries of the Asia-Pacific Economic Cooperation has increased by almost 30% - from 99 to 127 billion US dollars. The share of APEC in the trade turnover of our country is 30.7%. At the same time, China remains the main Asian trading partner for Russia (14.8% of the total foreign trade turnover), the Republic of Korea (3.6%), Japan (3.2%) - the aggregate trade turnover with these countries for the period exceeded 93 billion US dollars.

One of the important factors for the successful development of foreign trade is the ability to make quick and efficient settlements between the parties to the transaction. It should be noted that over the past few years there have been significant changes in the field of international settlements. On current trends and prospects for settlements with Asian neighbors, we talked with Elena Mihailukova, head of the International and Interbank Operations Department of PJSC SKB Primorye, Primsotsbank.

What are the main trends in settlement with our trading partners in Asia today?
First of all, it should be noted that calculations at the global level are carried out according to established rules. The international settlement system implies that in most cases transactions are carried out through banks of countries that are the issuer of the settlement currency. That is, simply speaking, payments in dollars are mostly carried out through intermediary banks in the US, in euros - through European banks, etc.
According to various experts' estimates, world settlements in major currencies - the euro and the US dollar - range from 70 to 90%. However, this share is now declining in favor of the national currencies of Asian countries. Simply put, foreign trade participants are increasingly choosing yuan, yen, Korean won as the currency of settlements to settle accounts with their partners.

What is the reason for this choice? Is there any benefit in this?
Of course! For both parties to the transaction, there are both economic and operational advantages. First, you and your counterparty save on transaction costs when converting currency. It is enough to buy currency, for example, yuan, only once. There is no need to first buy dollars, and then on the Chinese side to transfer them to yuan. Secondly, the currency risks decrease - the price is fixed in the currency that the seller wants to eventually receive. And once the costs and risks of your content decreased - you can talk about the revision of the price of the goods.
In addition, settlements in national currencies are direct settlements, without the participation of intermediaries in third countries. Accordingly, these are advantages in the speed of settlements, as well as leveling the influence of the policies of third countries.

Still, is there such an influence? Do you feel it?
Once a foreign bank acts as an intermediary and conducts a payment, it must ensure that all requirements of its national legislation are observed with respect to such payment. They can apply their own policies to counter money laundering in order to comply with their own country's legislation. And in some cases, payment can be suspended by such a bank and sent for additional verification.
But when calculating in national currencies, banks of other countries do not participate in the payment chain. Accordingly, such influence is excluded.

Does Primsotsbank have experience in making settlements in national currencies?
Required. Back in the 98th year, our bank started one of the first in the Far East to build correspondent relations with Asian banks - first with Japan, then with China and Korea. Today, our correspondent network (that is, the infrastructure for client settlements) includes the largest banks of these countries. This allows you to quickly and efficiently make payments.
We open accounts and settle accounts in RMB and Won of the Republic of Korea, as well as in Japanese Yen. At the same time, we fully meet the needs of our customers in conversion operations with Asian currencies. And we do this from the beginning of the working day in Vladivostok and until the end of the working day in Moscow (except for the Far Eastern Federal District, branches of Primsotsbank are in Moscow, St. Petersburg, Yekaterinburg, Chelyabinsk, Omsk, Irkutsk). And our technology allows the customer to buy Asian currency (for example, yen) and make a payment in one day, regardless of the time of trading on the Moscow Stock Exchange.
By the way, private customers can also purchase Asian cash in cash at the bank's offices - the mentioned yuan, won, yen, as well as Hong Kong dollars and Thai baht.

Are there any particular nuances? Maybe some requirements?
There are no specifics in conducting settlements in national currencies - payments in Asian currencies are carried out as well as in US dollars. The only thing is that the settlement currency should be indicated in the foreign trade contract (if necessary, the rate of conversion from one currency to another is indicated).
However, for the years of our work in this direction we have encountered a number of peculiarities of the local currency legislations of the Asian countries when conducting settlements in national currencies, as well as the requirements for processing payments. Today, most of the nuances and requirements are known to us, and we willingly share our experience with our customers. Including - in the framework of seminars, which we regularly hold for participants of foreign trade activities on a free basis in all regions where we have divisions.

That is, do you specialize exclusively in settlements with Asia?
Not really. It would be more correct to say that Asia is traditionally the center of attention for us. Our home region is the Primorsky Krai and the Far East (the head office of Primsotsbank is located in Vladivostok, the Bank has 40 offices in the Far Eastern Federal District) - historically located at the intersection of trade routes with these countries. Therefore, most foreign trade companies located here conduct their business with Asia. More than 60% of international payments in our bank account for the above-mentioned countries in Asia. At the same time, China occupies a leading position.
In a special focus - China. We strive to develop our relations with Chinese banks, which allows us to provide quick and effective settlements with the Middle Kingdom.
In September, we participated in a number of events in the Chinese direction. On September 5, Primsotsbank together with the Association of Russian Banks organized an international round table "Russia-China - Topical Issues of Interbank Cooperation". Representatives of banks of both countries, the regulator, the government, investment structures, news agencies and other organizations took part in this event.
On September 12-13, we took part in the work of the Subcommission on Cooperation in the Financial Sphere of the Russian-Chinese Commission to prepare regular meetings of the heads of government in Sochi. The annual meeting of the Sub-Commission is a platform where the Russian and Chinese parties (representatives of central banks, commercial banks, investment structures, insurance companies, payment systems, etc.) share problems that arise with each other and seek ways to solve them.
It is gratifying that at both events the parties unanimously agreed that direct settlements in national currencies are extremely important for both countries, especially in the context of geopolitical tensions. Thus, their development can be called a matter of state importance.

In addition to settlements with Asia, what other products does your bank offer to participants in foreign economic activity?
We pay significant attention to the full comprehensive service of companies engaged in foreign trade - from settlement transactions (not only with Asia - from anywhere in the world!) And currency control, to financing participants in foreign economic activity. We provide settlement operations in 9 foreign currencies with any countries of the world. Depending on the needs of the client, we offer various flexible solutions for currency conversion, we hedge currency risks. Also, Primsotsbank issues guarantees in favor of customs authorities for a certain category of foreign trade participants - customs representatives, authorized economic operators, owners of bonded warehouses, customs carriers and others.
In all our branches and offices there are highly qualified specialists of currency control who can consult the client in a competent and qualitative manner on virtually any issues of international settlements and currency legislation.

We invite participants of foreign economic activity to mutually beneficial cooperation. Consulting support for international settlements can be obtained from Primsotsbank's International and Interbank Operations Department at PJSC SKB Primorsky: +7 (800) 200-42-02 (ext. 2248, 2020, 2361). For more information, please visit the Bank's website:

15.03.2018 14:15:12

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