If sanctions are lifted, what will happen to the dollar? How will it be: Russia is preparing to ban the dollar? Media: The United States is preparing sanctions against Iranian and Russian companies helping Syria

Let’s imagine for a moment that sanctions have been lifted and banks in European countries, where government bonds now bring negative returns, are transferring part of their funds to Russian securities or lending to Russian enterprises. The consequence will be a sharp rise in the ruble - probably to a level of about 50-52 rubles. for a dollar. The competitiveness of Russian goods will decrease, the profits of exporters will decrease (the ruble costs that have increased over the past two years cannot be reversed, and ruble revenue will fall). But something else is more dangerous: if we take into account that oil and gas (read dollar) revenues of the federal budget amount to up to 40%, then a strengthening of the ruble by 20% will “cut off” at least 8% of revenues (up to 1 trillion rubles). The balances of the Reserve Fund and the National Welfare Fund, which amounted to $32.2 and $72.7 billion as of September 1, will depreciate in rubles in the same proportion - from 6.8 to 5.4 trillion rubles. Given the increased deficit, both funds will be exhausted in the second half of 2017, and balancing the budget will be almost impossible due to the fall in the ruble price of oil below 2,400 rubles. per barrel, which did not happen even in January 2016 at local lows in oil prices.

Domestic banks, which have recently been lending to commercial projects at 16-20% per annum, will have competitors in the form of Western financial institutions offering rates 3-4 times lower. It is unlikely that this will sharply increase investment activity (ruble demand on the domestic market will remain depressed, including due to further cuts in budget expenditures, so few will risk investing in business expansion), but will significantly reduce the profits of the banking sector (and the taxes charged taxes on it), calling into question the survival of many Russian financial institutions.

Agriculture

Over the past two years, the agricultural sector has shown steady growth (by 3.0% in 2015 and by 2.6% compared to the same period last year in the first half of 2016). To a large extent, manufacturers are just getting used to the relatively preferential conditions caused by the embargo and are investing heavily in the development of production. The lifting of “counter-sanctions,” which will undoubtedly happen if the Europeans take the first step, could result in losses and lost profits for thousands of agricultural enterprises, especially since producers in Central Europe, which suffered the most, are ready to quickly return to the Russian market. You can be sure that the process of import substitution, as well as the market growth in agriculture, will stop. At the same time, a compensatory reduction in prices is unlikely to happen - European producers will be able to sell their goods at more expensive prices, since the differences in quality between cheese and “cheese products” are too striking.

Oil production and defense industry

An essential element of the sanctions was a ban on the supply of high-tech products to Russia, in two directions. On the one hand, the blow was dealt to the technologies for extracting “difficult” oil and gas in the Arctic and on the shelf, on the other hand, to the military and space industries, where dependence on imported components remains very high.

But even here, lifting sanctions will do little good. In recent years, Russian oil companies have relied on increasing the recovery rate at old fields and have succeeded: in 2016, oil production is expected to be 540-543 million tons versus 534.1 million tons in 2015 and 526.7 million tons in 2014 . Returning to high latitude mining plans would be counterproductive. The cost of oil there exceeds $70 per barrel, for gas - $100 per thousand cubic meters. m, which makes production completely unprofitable under current conditions. Sanctions in such a situation are more likely to fix the status quo (and are more likely to save from yet another senseless investment, rather than cause significant harm).

Our defense industry is responding to sanctions by trying to establish the production of missing components at domestic enterprises, and partly due to this, industrial production is still declining very moderately.

Get out of the swamp

Of course, you can find areas where the lifting of sanctions will have an obviously positive effect, for example, the stock market, which will respond to such a step with explosive growth. However, even here one can wonder whether this will lead to another “bubble” and whether it will provoke an increase in prices for assets and real estate, which, again, will ultimately be passed on to consumers.

It seems to me that Russian economists underestimate the fact that the imposition of sanctions, without greatly exacerbating the economic downturn, limited competition in financial markets and artificially depreciated the ruble, which allowed the government to cope relatively successfully with budgetary challenges. Russia's status as a “financial pariah” is a critical element of the “new normal” that is often talked about in the Kremlin, the government and the Bank of Russia. Not to mention the fact that it is in full accordance with the authorities’ policy towards import-substituting industrialization.

If sanctions are lifted, Russia will begin to restore its position only as a market for European goods and financial services, but not as a powerful industrial center oriented to the global market. European enterprises are unlikely to come to us with direct investment, since with the growth of the ruble caused by the lifting of sanctions, comparative costs will again be too high, and household incomes (largely supported by the budget, the hole in which is expanding) will continue to fall.

The ruble, despite the ongoing economic crisis, does not want to decline against major world currencies. The lifting of sanctions would be the best signal for its growth, which would have disastrous consequences for public finances and seriously hamper industrial recovery.

Therefore, I once again urge you to think about whether we understand well what we are striving for now? After all, if a person finds himself in a swamp and wants to get out of it, the greatest danger comes from vain movements, the result of which is an increasingly deeper descent into the quagmire. We need not try to climb out onto the same “bump” that we fell off at the beginning of the crisis, but look for a way to the shore.

Sanctions - and here Russian politicians turned out to be right, and Western ones were unforgivably wrong - did not “tear the Russian economy to shreds.” And, as you know, “what doesn’t kill us makes us stronger.” Therefore, it seems to me that today it is more correct to look for new sources of growth, instead of waiting for the restoration of the old ones. Especially if such a restoration can have such unpredictable consequences...

Most recently, a new bill was introduced to the State Duma, which provides for a ban on the US dollar: its storage and circulation.

If this law comes into force, Russian citizens will have to close all dollar accounts and exchange the monetary unit for rubles, euros or other available currencies. The restriction cannot apply to government bodies, representatives of the State Duma, employees of the Central Bank, FSB agencies and the Russian Ministry of Defense. The law provides for the closure of dollar accounts automatically after 1 year. In case of failure to comply with obligations under the law, dollars will be seized by tax and customs officials.

However, if these funds are seized, their value will undoubtedly need to be reimbursed. This will not happen immediately, but in about a month. After the law comes into force, Russian citizens will not be able to buy this currency on the territory of the Russian Federation. If someone urgently needs a dollar, the need will need to be proven. One of the good reasons may be a trip abroad, but only to those countries that do not have their own currency and only dollars are in circulation.

For example, if a resident of Russia travels to one of the European countries, it can be argued that in this case dollars will not be required. It is important to remember that the restrictions provided for by the bill will apply only to citizens of the Russian Federation. Residents of Russia are accustomed to buying this currency if they intend to travel abroad. In addition to the countries of the European Union, those countries where you can do without the dollar include Georgia, Iceland, Mongolia, China, Macedonia, Serbia, Monaco, Montenegro, Turkey, and CIS countries.

A ban on dollars in Russia or the introduction of multiple exchange rates?

According to the chairmen of the State Duma, the spread of the dollar in Russia has a detrimental effect on the popularization of the ruble. As a result, the ruble cannot become a full-fledged world currency. If a Russian prefers to store funds in dollars, this may pose a threat to the country’s economy as a whole. Some officials believe that Russian citizens need to be rid of the dollar in advance and ensure restrictions from the negative influence of this currency. Representatives of the United Russia party reacted to the bill without much enthusiasm; moreover, they called this proposal meaningless.

Some party employees believe that considering such a bill is completely absurd, and the dollar is unlikely to ever be banned. It is known that the proposal to exclude the dollar from circulation is being discussed for the second time. If there is further growth, strengthening and stabilization of the American currency, the United States will become an exporter of gas and oil. In this case, there is a considerable probability of the ruble falling. This, according to experts, will happen quite abruptly. Restrictions on currency turnover may become extremely relevant. It may be necessary to introduce restrictions on the turnover of other popular currencies. Many believe that Degtyarev, who proposed this solution, expresses the general idea. One option would be to introduce multiple foreign exchange rates.

During Gorbachev's time, the practice of trading a large number of currencies was carried out. Thus, citizens were provided with, albeit insignificant, support when traveling abroad. People could safely buy the currency that was needed. It should be noted that today this practice contradicts the agreement between the Russian Federation and the International Monetary Fund. If the government decides to introduce multiple courses, speculation will become apparent. Entrepreneurs will have to pay inflated taxes, and the likelihood of selling money on the black market will increase. However, more than one scenario can happen.

Russia's economic problems are the main factor in decision making

Whether the State Duma will decide to ban the dollar in Russia depends on the development of the economic situation in the country. If the economy grows rapidly and gains momentum, then this law will remain in the draft.

The most stringent conditions regarding exchange rates are in Argentina. This country has a considerable number of restrictions on the dollar and other foreign currencies. If Russia is hit by an economic crisis, a similar situation may arise. It will be possible to confiscate dollars from the population or buy them at a reduced price. In this regard, this issue should be treated with maximum precision.

The disappointing Argentine scenario is also possible for the reason that oil is very expensive, budget expenditures are constantly growing, and revenues, in turn, are greatly inflated. At the same time, inter-budgetary and pension problems are not taken into account. The fiscal burden in Russia is extremely high, taxes are rapidly increasing, including for individuals and legal entities.

Many funds are spent to cover deficits, this is done through oil and gas savings. There may be a stress on gold foreign exchange reserves in the future. The need for currency changes exists and can lead to significant fluctuations in the global market. Degtyarev’s initiative may be in demand in the future, and his point of view may be correct.

If the government passes this law, Russia will not be the first country with such a restriction. In 2013, Syria adopted a decree banning the dollar in the country. Commercial banks that violate this prohibition and individuals are criminally liable before the law. A violator who distributes dollars throughout the country faces up to 10 years in prison or a serious fine.

Contrary to popular belief, a complete move away from the dollar in Russia in 2018 will not minimize losses from US economic sanctions. In practice, it is only possible to limit the influence of this currency by reducing its volume and refusing to use it in settlements with individual partner countries. However, even if the government decides to completely abandon the use of the American dollar, it is unlikely that such a policy will be supported by ordinary citizens who, for a variety of reasons, do not want to keep their savings in the national currency.

Prerequisites for cancellation

The first rumors about a possible abandonment of the use of the dollar appeared 4 years ago, when sanctions were imposed on Russia, which caused great harm to the economy. In many ways, this negative impact was due to the high dependence on the American currency, which led to a sharp depreciation of the ruble. But today, talk about whether the dollar will be abolished in Russia in 2018 has again begun to gain momentum: it is already obvious that the United States will continue to tighten sanctions and the only way to reduce the financial losses of the Russian Federation is to use another currency for settlements with foreign partners, which will not have such a big impact on the country's economy.

On the eve of new sanctions, Finance Minister Anton Siluanov voiced his position. According to him, in the current situation, the American currency is becoming a very unreliable instrument in international payments. And it is necessary to use all opportunities to reduce the current volume of investments in the US economy, not only by refusing to purchase American bonds (in two months the volume of investments in the Russian Federation decreased from 96 to 15 billion rubles), but also by switching to the use of alternative currencies in international payments.

Considering that in the future the situation can only worsen and Europe, in tandem with the United States, will continue to limit Russia’s financial capabilities, deputies began to seriously discuss abandoning the dollar in the spring, believing that this is the only real opportunity to minimize the consequences of sanctions. Later, economist Yakov Mirkin, although he confirmed the fact that deputies were discussing a new plan for the development of the foreign exchange market of the Russian Federation, but completely denied information about making a specific decision on this issue and developing relevant legislative acts. So, while such a scenario is indeed possible, it should not be expected until the end of next year.

According to Alexander Razuvaev, an expert at the Alpari analytical agency, the Russian Federation cannot refuse to use the American currency. He noted that today the dollar keeps the Russian economy afloat, and citizens can safely pay for goods and services abroad, which may cause problems if the government decides to abandon the use of such a currency. In addition, do not forget that the dollar is the most “traditional” savings currency, since more than 70% of depositors do not trust the ruble, fearing its sharp depreciation.

The Russian President has already expressed his position. At a July press conference, Vladimir Putin made it clear that the government will not limit the opportunities of Russians and does not intend to abandon the use of American currency. It will, as before, be in circulation in the country, but its settlement capabilities will depend on the position of the US authorities.

How real is this?

Will the circulation of the dollar be banned or will citizens who use this currency for payments and storage of savings not have to fear new restrictions? Experts believe that in practice such a scenario is difficult to implement, at least in the current economic realities.

Firstly, it is not clear what currency can replace the dollar for international transactions. If, for example, the economy of the country with which settlements are made is in crisis, then for the other party this may result in additional financial losses. But such risks can be completely eliminated if the transaction is settled in dollars.

Secondly, one should not discount currency volatility, which is typical for developing countries. For example, neither the Turkish lira nor the Russian ruble are stable, and although the yuan was included in the IMF “basket”, it is still not very popular due to non-transparent exchange rate formation (in 2017, only 1.5% of payments were made in yuan).

Alternatively, you can switch to the euro, but this solution may also result in additional problems. In particular, one should not discount the instability of the European Union and its complete dependence on the United States.

The transition to international payments in national currencies is a long and complex process. According to forecasts, only by 2020 the yuan will be able to increase its share to 8.5%, despite the fact that it is considered a leading contender for replacement. And while there is general uncertainty, there is no point in seriously discussing the possibility of changing the dollar. According to Tamara Kasyan, vice-president of the Russian Club of Financial Directors, even if Russia and Turkey, which is also on the sanctions list, decide to initiate this process, the United States is unlikely to notice their refusal from the dollar, while for the countries themselves it is will result in certain costs and problems. It is better to spend resources on strengthening the Russian economy, which will inevitably lead to a reduction in dependence on a strong dollar.

More about de-dollarization of the economy: video

MOSCOW, 18 0kt - PRIME, Natalya Karnova. Trade wars between the United States and China, sanctions that could be expanded, a possible reduction in the volume of trade in dollars, as well as the “pension issue,” which is painful for many Russians, were the main economic topics raised by President Vladimir Putin at the plenary meeting of the Valdai Club.

TRADE WAR

One of the main topics of the meeting was the “trade wars” between the United States and China. According to Putin, one must always react and protect one's interests, and Russia, against which sanctions have been imposed, and China, against which a trade war is being waged, are doing just that.

Answering the question of how Russia will react to sanctions against it, and what advice the president could give to China, the president emphasized that China is no less a great country than those who are waging a trade war against it. “I don’t think China needs our recommendations,” Putin said.

Media: The United States is preparing sanctions against Iranian and Russian companies helping Syria

He recalled that the Chinese economy has already become larger than the American economy in terms of volume, although GDP per capita, given the demographic situation in China, is still lower. But the growth rates demonstrated by the Chinese economy are high, despite some recent correction. This will inevitably lead to changes in the economic situation between countries.

Undoubtedly, both Russia and China still have a lot to learn from the United States. The American economy is high-tech and quickly introduces modern innovative solutions. However, trade wars may also have a negative impact on it.

In the medium term, current US actions in the global economy can bring a positive effect, Putin believes. First of all, we are talking about pre-election political rhetoric. The United States will hold midterm congressional elections in November, and then it will be time to prepare for the presidential campaign. In this situation, the current government needs to maintain positive trends in the economy.

But in the long term there will be no such effect, the head of state is sure. On the contrary, negative consequences are inevitable, since what is being done now directly affects the economy. Currently, trade strikes between the US and China cost $500 million each; if this situation continues, the figure will rise to $1-1.5 trillion. This is about 0.4% of the global economy, which will certainly slow down growth if the trade conflict escalates. According to Putin, no one is interested in this.

Ultimately, the one who initiates trade wars and sanctions suffers from them himself, he stated. Russia will not yet cancel its retaliatory measures to Western sanctions; the longer they persist, the greater the chances for those who left the Russian market not to return to it.

DEDOLLARIZATION IS TO BE

Another topic that the president dwelled on in detail was the reduction in trade in US dollars. Russia will move in the direction of de-dollarization of the economy, but not to undermine this currency, but for its own security, he assured. We are talking about possible sanctions on transactions in dollars for Russian banks, which may be adopted in November. In this regard, the plan to move away from payments in dollars is now being actively discussed, and domestic companies are also reducing their dependence on the American currency.

Ministry of Finance: Delays in payments by foreign legal entities on debts to the Russian Federation are associated with sanctions

The United States, questioning the dollar as a universal means of payment and the only reserve currency, is “cutting the branch on which it is sitting,” Putin said in this regard. He called this a typical mistake of an empire, which always thinks that “it may make some mistakes, it may incur some costs, because its power is such that it doesn’t mean anything,” he said.

However, over time, the number of these costs and errors increases and a moment comes when they can no longer be dealt with either in the security sphere or in the economic sphere. It is not surprising that many began to think about switching to national currencies, the president noted.

This applies, for example, to trade with Iran. The United States, which has withdrawn from the agreement on the Iranian nuclear program, is threatening sanctions against everyone who does business with this country and wants to disconnect it from the SWIFT payment system. In August, the EU began to talk about the need to create an independent analogue of SWIFT in order to protect its companies from these sanctions. Iran, in turn, does not exclude this option.

The sanctions that the United States threatens those who do business with this country may frighten companies connected to the American market, Putin noted. They will leave, but others will remain. EU countries want to trade with Iran and are considering all possible options for this. All this may ultimately again affect the United States itself and the global trading institutions it has introduced.

ONCE AGAIN ABOUT PENSIONS

The President spoke not only about international trade, but also about issues that are pressing for many ordinary citizens, in particular those related to pension reform. A law has recently come into force gradually increasing the retirement age by five years. In return, the authorities promise stable indexation of pensions in real terms, that is, above inflation.

A number of measures are provided to mitigate the decision, in particular, early retirement for mothers of large families and protection of persons of pre-retirement age. This, among other things, increases unemployment benefits for them and introduces liability for employers for dismissal before retirement. According to Putin, if changes to pension legislation are not made now, then in the near future this will still have to be done.

The fact is that life expectancy is steadily increasing. “By 2024, we plan to reach 78 years in life expectancy, and by 2030 – 80 years,” the head of state cited the forecasts. The changes taking place now are painful, but they are being carried out in all countries, although no one likes them. However, people for the most part understand that this is inevitable, and trust in the authorities has not been lost, he concluded.

We have all somehow gotten used to it and even forgotten about the sanctions imposed against us by Western countries. New trade and bans no longer even make it to the top news, but this time American congressmen managed to regain the attention of the Russian public, so much so that rumors quickly spread among the people about the imminent ban of the dollar in Russia. This is not true, but there is no smoke without fire. Those who keep their money in dollars may have problems.

What's happened?

In the American city of Washington, a new package of economic sanctions against our country was discussed. About a month before the official hearings, details of the new document began to leak into the press, which caused a wave of rumors and by the beginning of last week, the Russian information field took on the following form: “The Americans will ban VTB from working with dollars, and ours, in response, will generally ban the circulation of dollars in Russia (and together with China we will switch to the gold yuan).” Everything, of course, was a little different.

Initially, the following content of the sanctions package was discussed:

1. Large Russian banks (there are three on the American list: VTB, Sberbank and Rosselkhozbank) will be prohibited from conducting transactions in dollars and/or will be disconnected from the SWIFT system

2. American investors will be prohibited from buying Russian federal loan bonds

3. All at once.

The first signal that something would happen soon was the unexpected frankness of the head of one of the country's largest banks.

We have a lot of dollars. If people run to withdraw money, we will give it to everyone,” said VTB Head Andrei Kostin in an interview with Business FM. - I am convinced that all clients of all banks will be able to get their money back. This is a fundamental point. How this will be done, in what currency - this is another question, the head of VTB added in an interview with Bloomberg TV.

If the head of VTB wanted to reassure investors with his words, it somehow didn’t work out very well.

But the Americans accepted the fourth version of the sanctions package, and it does not coincide anywhere with the original plan.

Outplayed

Sanctions will be imposed against Russian politicians and businessmen close to Vladimir Putin, as well as against companies operating in the oil sector. In order not to get up twice, American senators added to the package of anti-Russian sanctions the creation of a new special service that will fight “Russian hackers.” The service will be called the Bureau of Cyberspace and Digital Economy, and it will be engaged in the fight against Russian companies and citizens who “have the ability to support or facilitate the implementation of malicious activities in cyberspace.” Before the new enemy department begins work, subscribe to Additional Office on social networks:

In general, the Russian economy has more serious problems than the new sanctions package can create, but let’s imagine for a moment that it would have been accepted in its original version.

The ruble is too weak

According to the Central Bank of the Russian Federation, 20% of Russians keep their savings in dollars, and the main banks in which these savings are concentrated are exactly the same three from the new sanctions list. But even those who keep money in rubles may suffer greatly due to the likely devaluation of our national currency.

The words of the head of VTB that they have accumulated a lot of dollars are also not reassuring because most of them are most likely kept in American banks, which means they can simply be blocked there.

This is how the Russian economy works - we sell oil and gas to the West, receive dollars for it and leave them in accounts in Western banks. Even the Moscow Currency Exchange has a correspondent account with GP Morgan. In general, in such a scenario, a huge amount of currency will be taken out of the economy without the possibility of conversion into rubles. First of all, this will hit large importers, who will have a crisis of non-payments, but it’s like in that joke when a son asks his father: “Dad, will the crisis hit us?”, and the father answers him: “The crisis will hit the oligarchs, and we f...”

There are rumors that the Government was considering a ban on the circulation of dollars on the domestic market of the Russian Federation as a counter-sanction. However, Presidential Press Secretary Dmitry Peskov completely rejected the possibility of such a step. Noting at the same time that: “the topic of dedollarization is actively discussed not only in Moscow, but throughout the world.” And countries are looking for ways to “provide and ensure a reduction in the volume of dollars in mutual settlements, when carrying out commercial transactions, investment and trade and economic.” “This is the beginning of the journey,” Peskov said.

And if they disconnect fromSWIFT?

Then the settlement system of Russian banks will become much more complicated, and the two largest international payment systems will no longer support all Visa and Mastercard cards issued by Russian banks. It will be possible to withdraw money from an ATM from such a card, but not to pay in a restaurant or store. Online shopping will also become impossible.

Collapse will not happen. Russian banks have already been threatened with being disconnected from SWIFT and they have drawn conclusions. The MIR payment system has been working normally for several years now. Iran has been disconnected from SWIFT for many years and nothing, banks have adapted.

Ban on purchasing OFZ

Another likely tool that the Americans intended to use to collapse the Russian economy could be a ban on the purchase of Russian federal loan bonds.

These are securities issued by the Russian Ministry of Finance - one of the most reliable and profitable types of securities. OFZs are very necessary for our state and are quite profitable for investors. They work just like all other bonds: the investor buys them, receives interest, and when the bond expires, the face value is returned to him.

The nuance is that a significant part of OFZ (more than 30%) now belongs to foreigners. And this is where the danger lies. If the United States imposes sanctions and prohibits its citizens and corporations from buying OFZs, bonds will begin to be sold quickly and they will fall in price.

The sanctions package could include two scenarios:

2. Ban for everyone. Such a ban will not legally bind anyone except the Americans, but the United States will certainly be able to put pressure, for example, on NATO partners or the Baltic states.

This could be a major blow to our economy and could lead to a serious devaluation of the ruble. Although, it would seem, much further. In the spring of this year, American investors “threw off” OFZs by 100 billion rubles and still continue to control a significant percentage of these securities. Imagine what would happen if they got rid of them now.

So what should I do?

The state wants to return to the Soviet experience and redirect government loans to the domestic market - to make sure that OFZs are bought by ordinary Russians. There is an opinion that those who held vouchers in their hands will treat the new securities from the state with some skepticism, but a restart of the “people's OFZ” program can be expected in the near future.

As another measure to protect foreign investors investing in OFZs, they offer a special system for ensuring the anonymity of such investments. But it hasn't been developed yet.

By and large, if you have OFZs, then you don’t have much to worry about, the Russian Federation does not refuse obligations on these securities and interest and face value will be paid. The point is that the purchasing power of Bank of Russia tickets may greatly decrease.

What if we, like Iran, are banned from selling oil and gas?

The main clients of the Russian oil and gas sector simply cannot refuse our services, so this option is extremely unlikely.

Don't panic!

Our economy, no matter what anyone says about it, is an important component of the global economy. Simply excluding it will not work and, in fact, it is unnecessary for anyone. In a global economy, all prohibitions hit both sides. The Americans will continue to introduce targeted sanctions against specific Russian businessmen and companies. But in general, the situation is developing in such a way that far-sighted entrepreneurs need to double-check the safety of their savings and the readiness of their business for shocks.