CLS, a provider of settlement services for foreign exchange trades, has delayed plans to add the Russian ruble to its currency list. Russia’s currency inclusion was planned to complete by November, however, Western sanctions prevented that. An official version of postponement is lack of time to solve the procedural issues. Apparently, there is another reason.
“The process for becoming a CLS currency is a major undertaking and is affected by a variety of factors, which impact both the timing and process. There are operational and legal considerations as well as geopolitical factors that require ongoing evaluation. That is the same for any currency,” David Puth, chief executive of CLS, said.
Meanwhile, CLS looks to assess the implications of the economic sanctions placed on the country to assure they do not impinge on CLS’s ability to provide its service.
Currently, there are 17 currencies that can be settled via CLS. Since 2011, the Bank of Russia has been negotiating with CLS to add the ruble in its system. In case that happens, it would be possible to include trade in rubles in operating flows in banks and companies around the world.
“The ruble could be on a par with the dollar, the euro and the yen in terms of transaction costs. Many hedge funds and companies around the world could get access to the ruble. The ruble would become a freely convertible currency. Currently, there is an opportunity to trade the ruble: many international banks provide clients with an opportunity to make payments in rubles, but this is a separate operating flow resulting in more time, other commissions and conditions,” Sergey Romanchuk, Head of Metallinvestbank’s Dealing Centre, said. In addition to sanctions, there could be insufficiency of morning liquidity of the ruble that could slow down execution of payments.
