The Integrated Foreign Exchange Market in the Eurasian Economic Space and Settlements in National Currencies

Abstract

This article examines the creation of an integrated foreign exchange market and the development of trade in national currencies. The establishment of a unified exchange area will help to shape direct market quotes and to perform conversions in national currencies without the mediation of the U.S. dollar or euro for carrying out cross-border settlements in the currencies of Eurasian Economic Space countries.

Keywords::

• foreign exchange markets
• integrated foreign exchange market
• national currencies
• Russian ruble
• settlements
• volume of trade

Notes

English translation © 2016 Taylor & Francis Group, LLC, from the Russian text © 2014 “Voprosy ekonomiki.” “Integrirovannyi valiutnyi rynok evraziiskogo ekonomicheskogo prostranstva i rasschety v natsional'nykh valiutakh: mify ili real'nost'?” Voprosy ekonomiki, 2014, no. 8, pp. 41–57. Viktoriia Iur'evna Mishina is a Candidate of Economic Sciences and chief specialist in the Currency Exchange Department of OAO Moskovskaia Birzha (Moscow); Liubov' Igorevna Khomiakova is a Candidate of Economic Sciences, senior partner at the Interstate Bank, and chair of the Global Economy and International Financial Relationship Department at the Financial University under the government of the Russian Federation (Moscow). Translated by Brad Damaré.

^1. This article uses the term “Eurasian Economic Space” (EAES) in the broadest sense, including all previously created integrational associations in the post-Soviet space: the Single Economic Space (SES), the Eurasian Economic Community (EAEC), and the Commonwealth of Independent States (CIS).

^2. OAO Moskovskaia Birzha (Moscow Exchange; MOEX) was formed in December 2011 in a merger of the two major Russian exchange groups, MICEX and RTS. It is a multifunctional foreign exchange platform for trading stocks, bonds, financial derivatives, currencies, money market instruments, and commodities. It consists of a Central Depository (NKO ZAO Natsional'nyi raschetnyi depozitarii; NRD) and a clearinghouse (ZAO AKB Natsional'nyi kliringovyi tsentr; NKTs), which acts as the central counterparty (for more, see http://moex.com).

^3. The Interstate Bank is an international bank accounting and credit institute founded by the CIS states through the governments and central banks.

^4. This is evidenced by the ration of shares of all CIS countries (4.2 percent) and Russia (2.9 percent) in global GDP (purchasing power parity; PPP) in 2013. The economic potential of CIS countries remains relatively weak compared to the developing economies of India (5.8 percent of global GDP) and China (14.4 percent), much less the developed countries like the United States (19.3 percent) and the eurozone countries (13.1 percent) (IMF, 2014, p.159).

^5. Proceedings of the Leadership Council of Central (National) Banks of EAEC Member States. Official site of the Interstate Bank, www.isbnk.info/analytics_payments.html.

^6. “Birublevaia korzina,” Kommersant, May 12, 2014.

^7. Calculations based on Osnovnye pokazateli oborota valiutnogo rynka Rossiiskoi Federatsii za 2011 i 2013 gg. Bank Rossii.

^8. Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April 2013, BIS, December 2013.