After the Russian invasion of Ukraine on February 24, Russia was hit with sanctions. The Russian central bank is also affected by this.
(Photo: dpa)
Berlin The finance agency entrusted with the federal government’s debt management does not know the amount of German government bonds held by Russia. “It really can’t be specified exactly,” said Managing Director Tammo Diemer on Wednesday. Since these are so-called bearer bonds, the creditors are not known.
From talks with investors and banking partners, however, we know that the euro has also played a role in the Russian central bank’s investment spectrum in the past. “Then federal securities are automatically a suitable instrument as a liquid euro investment opportunity,” said Diemer. “In this respect, I assume that the Russian central bank has of course also held federal securities in the past.”
After the Russian invasion of Ukraine on February 24, Russia was hit with sanctions. This also affects the central bank, whose foreign exchange reserves have been frozen. In addition, many Russian banks have been excluded from the payment network Swift.
That impacted the availability of a federal treasury note running until 2024 in early March. This was “significantly reduced” immediately after the sanctions came into force, said Diemer. “Market participants had difficulties in supplying the pieces.” There had been problems with the central clearing houses with the transfer of ownership (settlement).
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Market participants affected by the sanctions would no longer have been able to lend the securities on the so-called repo market. They were no longer available to the market “suddenly, overnight”.
“We have the volume that is in question there, estimated at 2.5 billion euros,” said Diemer. “In this extraordinary situation” it was added to the federal government’s own portfolio and then made available to other market participants via a repo transaction. “And that solved the problem,” said the managing director. These difficulties did not arise with other loans.
More: The federal finance agency is sticking to the bond plan for the time being