May 24, 2022

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Head of the Central Bank of Russia: We have an alternative to the Swift network.  Pie: Not ready

Head of the Central Bank of Russia: We have an alternative to the Swift network. Pie: Not ready

“Russia has a system that can replace the SWIFT international payment system internally,” Elvira Nabiullina, head of the Russian Central Bank, was quoted by Reuters as saying on Monday. She spoke of “the need to support bank customers”.

Nabiullina emphasized that “all banks in Russia will fulfill their obligations, and All funds in their accounts are insured.” On Monday, a meeting was held in the Kremlin with the participation, among others, of the head of the Central Bank of Russia and Vladimir Putin, at which the current economic situation in Russia was discussed.

Russian “Swift”? Not so fast

The Russian alternative clearinghouse system SPFS – because the head of the Russian Central Bank talked about it – backs about 20 percent. payments in Russia, It only works in the local system and is not ready to handle international payments – they notice Analysts from the Polish Economic Institute. In their opinion, the lack of access to SWIFT will encourage Moscow to expand the SPFS system and the Russian-Chinese CIPS payment system.

I remember that On Sunday, Western countries announced tougher sanctions against Russia for its invasion of UkraineIncluding cutting some Russian banks from the SWIFT system. On Monday, the US Treasury imposed sanctions prohibiting US entities from dealing with the Russian Central Bank and other government financial institutions. This weakens Russia’s ability to defend the ruble exchange rate and protect the domestic economy from sanctions.

See also: Economic “nuclear weapons”. “Russia can deal with it, but at what cost?”

What is the Swift system?

SWIFT is an international interbank network for exchanging information on foreign transfer orders. It is based in Brussels and is subject to European Union legislation. Sends the bank’s equivalent to an email. The system provides the ability to send unified information Regarding transactions between exporters and importers. Its purpose is to shorten the time required to execute the order and to automate the transfer processes. The role of the SWIFT system is purely informative Does not settle financial transactions.

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