Why is the French State a good client of the Central Bank of Russia?

Surprising observation, in the 2022 report of the Central Bank of Russia (BCR) : As for several years, France is the second country in the world where the BCR’s largest financial reserves are located. This is outside of Russia itself, where its 2,300 tons of gold are essentially stored, with an estimated value of €116 billion.

Remember that the Central Bank is both the brain and the lungs of the Russian banking and monetary system. It issues the ruble and ensures its stability, lends to commercial banks, sets interest rates between banks, and fights inflation. And it is she who, since February 24, tries to prevent the total collapse of the Russian economy and the finances of the Kremlin.

12.2% of BCR’s assets in France

Led by a brilliant economist, former adviser to Vladimir Putin, Elvira Nabioullina, Russia’s Central Bank was very fond of France, before the February sanctions. And France gave it back. No less than 12.2% of BCR assets are housed in France, compared to 13.8% in China. And only between 10% and 2.8% for the other seven significant countries, all allies of the United States.

The United States was the first place of domiciliation of BCR currencies before Vladimir Putin and his nationalist friends were upset by the fact that Russia, low in debt, placed its holdings in US Treasury bonds, which was equivalent to financing the Washington’s chronic budget deficit. With the first position recently occupied by China, France is now the first Western country preferred by the BCR, ahead of Japan (10%) or Germany (9.5%).

The United States, still great masters of the dollar, the queen currency of international trade and foreign exchange reserves, now have half the importance in the panorama of the Russian central bank (6.6%). They are followed by the United Kingdom (4.5%), Austria (3%), Canada (2.8%) and an undifferentiated group of other states (10.7%).

What exactly are these Russian assets in France? It is likely to be mainly public debt, so-called bonds, issued by the French state.”says Julien Vercueil, economist and specialist in Russia.

A debt of 2,800 million euros

These bonds, the French State in place every week to finance its debt, with the thousands of large international investors.

These investors are other States, public and private banks, investment funds, insurance companies, large companies. Although already heavily indebted, France guarantees, thanks to its good international reputation, a certain interest rate for a period fixed in advance, an average of eight years.

Last year, the state issued $285 billion in bonds to satisfy its growing appetite for loans. These have increased their debt to just over 2,200 million euros. With that of the local authorities and social security, the considerable French public debt now reaches 2,800 million.

Just under half is in the hands of non-French investors. How much and what exactly is in the hands of Putin’s Russian financial arm? The France Trésor agency, which issues the bonds and manages the State debt, assures unable to provide these details.

€22 billion of fixed assets

And it is justified in the following way: the bonds, once offered by France Trésor to the network of large private banks forced to do so, are bought and resold on a so-called secondary market, for tens of billions of euros every week. It invites us to question the Banque de France.

who doesn’t have no information to communicate. As for the Directorate General of the Treasury, the financial personification of the State, he proposes to interrogate… the Banque de France. But he ends anyway by bringing some laconic precisions.

the French state, in addition to the freezing of assets belonging to oligarchs for nearly 800 million, for good it immobilized 22 billion euros of assets of the Russian central bank”. The interest owed to Russia is well paid by the state, but then they freeze within the banks that hold the securities. Therefore, they are not paid to the BCR. Treasury adds that Russian foreign exchange reserves The s are well invested in debt securities, but not only in public debt”.

Classified as “confidential”

What other thing? And furthermore, would there be other Russian assets that would explain why the 22,000 million seized do not correspond to the French 12.2% of the BCR’s reserves, themselves estimated at 578,000 million euros? Mystery. the detail is confidentialopposes Treasury.

We also won’t know how much the French state borrowed from Russia after it stole Crimea from Ukraine in 2014. Whatever the amount, it was authorized: so international sanctions, though already “unprecedented,” did not worry the Russian central bank. We hadn’t gotten into serious business yet.

Why is the French State a good client of the Central Bank of Russia?

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