Transcript of Video

• Sanctions Disrupting Russian Trade: Chinese Banks Cautious Amid Threat of US Penalties

  Major Chinese banks want to stay away from trade with Russia because they have balances nominated in American dollars. That means that American authorities can cancel any transaction any time, if they are not compliant with the sanctions regime.

  Chinese banks are running severe compliance checks, associated with these transactions, and this means that the imports of everyday goods most Russians use is severely delayed and potentially it could end up in, black markets for Chinese imports in Russia, like Iran has.

  I think that China is leveraging this situation to its benefit, because PSC actually doesn't have policy of internationalization of yuan, so yuan liquidity is very tight and that means the Chinese can leverage their deals with Russians in terms of buying oil and gas, to their benefit, quite significantly. And they already have demanded internal prices for Russian oil and gas.

  Unfortunately, no sanction regime is able to stop the war by itself. At least there are no historical precedents for it. But sanctions can significantly degrade the economy, which supports the war effort and we are already seeing tangible efforts, effects of sanctions. Russian economy is already overheating at 8% of military expenditure of GDP.

  But this is not even close to 46% of military expenditures to GDP that, for example, US did at the time at World War Two. So it means that sanctions are really effective. They won't allow Russia to carry on the war for like ten years more. Now, the time horizon is about a year or two.