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UnionPay, China's banking system, will continue to serve Russia's financial needs

Russia has announced plans to continue using China's UnionPay system to operate its financial system following the suspension of Visa and Mastercard in the country.

China's Communist Party is subject to consequences as well as the Russian government, experts say, due to its strategy of evading Western sanctions through the Chinese financial system.

Three of Russia's largest banks -- Sberbank, Alfa-Bank, and Tinkoff -- announced plans to begin issuing credit cards via the China UnionPay system on March 6. At a press conference on March 3, the China Banking and Insurance Regulatory Commission (CBIRC) also pledged that the country "will continue to do business" with Russia without sanctions.

He said that banks want to avoid being implicated in the violation of Western sanctions, so they have complied with past sanctions against Iran and Hong Kong governments.

The Asian Infrastructure Investment Bank (AIIB), which is based in Beijing, also announced on March 3 that it has suspended "all activities related to Russia and Belarus."

Russian holds 6 percent of the voting power in the 6-year-old AIIB, the third largest after China and India.

A notable aspect of the AIIB's creation is that it was established as part of Xi Jinping's "Belt and Road Initiative" in order to reduce the United States' dominance of the World Bank and IMF.

According to Song, smaller banks, such as those that only operate within China, are immune to the sanctions imposed by the West. Therefore, the big banks will shift all Russian-related business to these smaller banks to avoid sanctions.

15 March 2022


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