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China’s yuan is replacing the dollar and euro in Russian bank accounts amid Western sanctions, report says

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  • Russian banks say clients are opening more accounts in Chinese yuan instead of other currencies, Kommersant reported Friday. 
  • A March survey found that large Russian banks have seen a spike in funds being converted into yuan. 
  • One bank saw an eight-fold surge in the volume of funds on accounts in yuan, and another saw a four-fold jump. 

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Russian banks are reportedly seeing sharp increases in the Chinese yuan in their clients’ accounts as Western sanctions limit access to the dollar and euro.

According to a March survey conducted by Russian financial daily Kommersant, large banks have seen a spike in funds being converted from dollars and euros into yuan. New accounts are also being opened with yuan.

In Tinkoff Bank, the volume of account funds in yuan has gone up eight fold. MTS Bank saw a four-fold jump, and the Bank Saint Petersburg’s increased by 3.5 times. 

“Under the conditions of restrictions, many companies see settlements in yuan as more stable and predictable,” MTS Bank told Kommersant. Another Russian bank noted that many companies involved in wholesale trade are switching to settlements in yuan. 

The shift comes as Western countries continue to impose severe financial sanctions on Russia for its war on Ukraine, including limitations on foreign currency use. But since China has not participated in the wartime sanctions, access to the yuan remains open, making it a potential currency alternative

Russian finance consultant Yugar Aliyev told the Kommersant that a sea change is underway. In the medium term, he said, the yuan “will not only replace the dollar in settlements with China, but also become a more reliable means of international settlements for Russian companies.”

But while transactions with the Chinese currency have grown, the dollar and euro remain dominant worldwide. 

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