Russian bank chief calls for limits on foreign transfers

The measure is necessary to support the ruble, according to the head of VTB, Andrey Kostin

The CEO of Russia’s second-largest bank, VTB, has argued that the country must close loopholes that allow unregulated capital outflows. Andrey Kostin claimed that the current situation is damaging the ruble.

Speaking to the RBK news agency in an interview published on Monday, Kostin said that while residents are banned from sending more than $1 million or the equivalent in foreign currency abroad per month, there are no such limits on ruble transfers.

“There are still loopholes. Let’s say you decide to transfer money abroad, there are restrictions of $1 million per month, but for rubles, you can transfer as much as you want. What happens next? You transferred a billion rubles to Armenia, and can immediately exchange it for dollars. This possibility should be eliminated,” Kostin stated, adding that this harms the ruble’s exchange rate.

He suggested setting a monthly transfer limit of 100 million rubles ($1 million), claiming that additional steps are necessary to support the Russian currency. Kostin said he expects the Bank of Russia to consider his proposal, but noted that the introduction of the measure would depend on the ruble’s performance on the market.

After strengthening sharply in the summer of 2022 amid high export revenues and strict controls on capital movement, the ruble began to slide against Western currencies and dropped below 100 to the dollar in mid-August, its lowest rate since last year.

READ MORE: Russia may bring back capital controls – Bloomberg

The Bank of Russia first limited cross-border currency transfers in March 2022. Initially, the limit was $5,000, although the regulator raised it to $1 million as the situation on the currency market stabilized. The restrictions were extended several times, most recently until September 30. Under the regulations, Russian citizens and residents of ‘friendly’ countries can transfer no more than $1 million to accounts in foreign banks each month.

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