Bangladesh Bank closer to alternative payment system

Business Desk :
The Bangladesh Bank is inching closer to making modalities for an alternative payment mechanism with Russia for trade amid multiple sanctions, including Swift ban, imposed on the country following its war with Ukraine.
It is expected to send the modalities to the Economic Relations Division (ERD) within the shortest possible time, according to officials.
The regulator will also inform the Ministry of Commerce (MoC) and the Financial Institution Division (FDI) of the matter.
After receiving the modalities, the ERD is likely to communicate with the Russian Federation with a proposal to confirm the system.
Dhaka is desperately hunting for another payment system as bilateral trade suffers a setback due to sanctions by the US and its allies, according to a source.
Last September, the Bangladesh mission in Russia sent a report to the Commerce Ministry to take alternative payment systems for exporting goods amid the US-led Western sanctions against Russia.
If sanctions last for long, it is feared, there are possibilities of hyperinflation and economic turmoil only to adversely impact bilateral trade.
Trade will suffer to a great extent until and unless there is a free and safe payment system, it said.
According to a source, a proposal was mooted for doing trade in national currencies between Bangladesh and Russia for some time.
Central banks of both countries sat in multiple meetings over the issue.
However, things still remain unsettled for lack of an agreement on any accepted business process.
Currently, Russian policymakers are counting on being able to trade in their national currency Ruble.
They also give attention to barter mechanisms for foreign trade.
Russia has been doing some international transactions in cryptocurrency with Brazil, Indonesia and African countries.
Besides, the Russian authorities and companies are finding options to stop relying on dollars and euros. Russia is now increasingly turning to the Chinese Yuan.
The embassy said payments through Ruble, Yuan or cryptocurrency are all experimental now and need some time to make a pragmatic decision.
Following a close view of the payment systems by several countries, it suggested taking any one or two from the three payment methods in near future, not now.
Some Russian banks are still operating with Swift systems that come with great uncertainty and problems.
In many cases, payments take much time to settle.
Although Russia has its own system in place called FSPS and MIR, these are mainly functional for domestic banking and credit cards.