Igor Shuvalov, Chairman of the State Development Corporation VEB of the Russian Federation, suggested recalling the experience of VEB during the USSR and using clearing settlements. This is a method of international settlements, usually used when the country lacks a freely convertible currency or severe currency restrictions. Special agreements are concluded, the clearing currency is chosen, and the claims are offset, as a result of which the remaining obligations of the settlement participants are repaid.
“The most important thing is to resume these operations, to learn how to carry out settlements on them, not by moving money, but by making settlements – perhaps in some special, more advanced form than in the Soviet period, according to the balance that is formed on one of the parties to foreign trade activity. ”, Shuvalov said at a session of the Eastern Economic Forum.
The head of the state corporation clarified that he already has a development team ready: “VEB still has 10-12 people from the old days, they work, thank God, they didn’t go on a well-deserved rest, who did everything by hand, documented it, they know how it is works”.
To implement Shuvalov’s plan, it is necessary to create a legal framework. This is impossible without government decisions, it must agree on this matter, appoint an authorized agent, Shuvalov said. This agent, in his opinion, may be VEB or not only him, but “some kind of consortium, and here we can act as partners with our largest banks.” “I think it would be useful to revive this competence now. But the decision of the Ministry of Finance is needed – how to do it. Combining old traditional technologies with modern ones today will be useful,” he said.
The clearing ruble was used in 1950-1963 for trade settlements between pairs of countries through their authorized banks – through balance sheet entries. Since 1964, it has been replaced by a common currency for the CMEA (Council for Mutual Economic Assistance of Socialist Countries), the transferable ruble. A special International Bank for Economic Cooperation was established for it, but the clearing ruble did not disappear; it continued to be used in settlements with the DPRK.
In addition, the head of VEB said that the sanctions would be strengthened and called on Russian banks to work as if all financial structures were already under Western sanctions: act as if they would be accurately entered. And to think that several of the largest banks are now under sanctions, and some banks will not be under sanctions, is an unlikely scenario.” Banks need to prepare to have alternative ways of settling customer transactions.
Shuvalov also sees a great future for the ruble as a regional reserve currency, although he admits that under the current conditions, such a forecast “sounds a bit ambitious or even inadequate.” “We will see this a little later. Let’s wait, time will tell. Please do not rule out that this is likely to happen, ”he urged.