FEATURED

Sanctions: Russia Launches Alternative Global Payment System To Replace SWIFT

Published

3 years ago

March 2, 2022

BIGPEN

Russian government has launched SPFS, an internally-developed global payments system which has been under development since 2014 to replace SWIFT in the wake of ban on Russia.

Governor of Russia’s Central Bank, Elvira Nabiullina, dropped the hint on Monday, saying that its global payments will continue to function despite the SWIFT ban.

Reports say the Russian government is also working on a “one world” digital currency for global trade as plans are under way to also use cryptocurrencies to circumvent economic sanctions and overcome the limitations created by a SWIFT ban.

BIGPENNGR recalls that last week, in an attempt to deter the Kremlin’s invasion of Ukraine, the United States, the European Union, and their allies removed several Russia banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT)—an interbank messaging system widely used for global fund transfers.

But the Bank of Russia’s governor, has said that Russia will continue global payments via an alternative to the SWIFT network maintaining that l its system was ready to take the place of SWIFT.

‘Russia has an internal replacement for SWIFT’, Russia’s central bank chief has said.

Outing Russia from SWIFT was a major blow to the Russian economy that effectively cut it off from the global payments infrastructure. Amid the flurry of economic sanctions against Russian banking system, the Russian ruble has plunged by roughly 30% to a record low against the U.S. dollar on the Moscow Stock Exchange.

On Monday, Elvira Nabiullina, the governor of Russia’s central bank, said the country’s payments infrastructure will continue to function despite the ban. In a Reuters report, Nabiullina stated the country’s internal System for Transfer of Financial Messages (SPFS)–can “replace SWIFT international payments system internally.” Stressing the importance to support its banking clients, Nabiullina affirmed that Russia will “fulfill their obligations” on the SPFS system that has been in development since 2014.

It remains to be seen if Russia is able to implement a worthy replacement for SWIFT. Given only 23 foreign banks are connected to the SPFS, compared to 11,000 banking members in SWIFT, it will be challenging for Russia to enable a payments infrastructure that can meet all of its transactional demands.