Kostin proposed to create a depositary settlement hub in the Persian Gulf countries
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The head of VTB, Andrei Kostin, proposed creating an alternative international depositary settlement hub that would replace Euroclear and Clearstream. According to him, the hub can be located in one of the countries of the Persian Gulf.
“We propose to create an alternative international depositary settlement hub. We all faced the problem of Euroclear, Clearstream. <...> We believe that one of the states of the Persian Gulf can (become) the center for basing a new financial depository, taking into account the concentration of large capital in this region,” Mr. Kostin said during the Financial Congress of the Bank of Russia.
According to the head of VTB, an alternative to the international SWIFT financial messaging system should also be created and new tools for raising capital should be developed. “Today it is mainly Eurobonds. Again, the entire infrastructure is built in the West. We propose to create new instruments that would take into account the national regulation of currencies and markets,” he explained. Mr. Kostin believes that the new financial infrastructure will attract Western investors and companies.
The initiative of Andrey Kostin during the congress was supported by the head of the Supervisory Board of the Moscow Exchange Sergey Shvetsov. However, he noted that the creation of a new depository hub is “a rather complicated process.” “I think we need not only to recreate on the basis of BRICS or someone else an international structure that forms global capital markets, but, probably, it needs to be immediately created in a decentralized form,” Mr. Shvetsov said. In his opinion, the centralized structure will be vulnerable to sanctions pressure.
In 2022, Euroclear and Clearstream blocked the accounts of the National Settlement Depository (NSD) as part of sanctions restrictions, due to which some of the securities of Russian investors were frozen. In June last year, the Bank of Russia estimated the volume of blocked Russian assets in NSD’s accounts with foreign depositories at 6 trillion rubles.
About whether the process of exchanging Russian and foreign assets is possible – in the material “Kommersant” “The Central Bank saves up for frozen”.
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