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China’s top bank puts halt on settlements with Russia.

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TLDR:

– Chouzhou Commercial Bank, a key Chinese bank used by Russian importers, has halted all settlements with Russia, according to anonymous sources.
– The bank’s decision will likely lead to a “logistics collapse” in the coming weeks, with exports to Russia expected to be severely impacted until at least March.

A major Chinese bank that facilitated transactions between Russian importers and Chinese suppliers has stopped all settlements with Russia. Chouzhou Commercial Bank, which became the main transaction channel for Russian importers after the invasion of Ukraine, reportedly notified clients last week that it was terminating relations with all Russian and Belarusian organizations. The bank’s decision has raised concerns about a potential “logistics collapse” in the coming weeks, with exports to Russia expected to be severely impacted until at least March. The bank’s transactions have stopped across major payment systems, including SWIFT, China’s CIPS, and Russia’s SPFS. Other Chinese cross-border payment systems, PingPong and Xtransfer, have also halted settlements. The move comes amidst threats of secondary U.S. sanctions, with Washington warning that it could cut off access to its financial system for foreign banks linked to companies that support Russia’s defense industry. It is unclear whether the bank’s decision is related to these sanctions, as China has largely complied with Western sanctions against Russia. The Central Bank of Russia, the People’s Bank of China, and Chouzhou Commercial Bank have not responded to requests for comment.

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