The domestic analogue of the international payment system may fall under Western restrictions
Russia’s international payments with friendly states are under threat. Before Moscow had time to rebuild all financial logistics, the collective West came up with new sanctions. This time, the G7 countries and the European Union are discussing plans to introduce restrictions against third-country banks that use the domestic Financial Messaging System (SPFS) instead of the international payment system SWIFT. If the threat is carried out, 20 countries will face problems, including Belarus, Armenia, China and Kazakhstan. Will Russia once again find a way out of the situation?
International banks face sanctions for using the Russian analogue of SWIFT, Bloomberg reports. “Measures are being discussed against third-country lenders using the Central Bank of the Russian Federation messaging system, similar to SWIFT, to circumvent restrictions,” — the article says. Note that sanctions are being discussed ahead of the June G7 summit in Italy, but specific steps have not yet been agreed upon. Why do the West need such measures in principle, how painful will they be for Russia and how will they affect international financial transactions?
Here it is appropriate to remember what SWIFT is and why Russia decided to abandon its use.
SWIFT — This is an international system for transmitting information and making payments, to which more than a thousand of the largest banks around the world are connected. The instrument turned out to be effective not only in a financial sense, but also in a political sense. Since the decision-making center for SWIFT is in the West, this system immediately after the start of the SWI and the introduction of “nuclear” sanctions began to be used against Russia, cutting off the largest domestic banks from it. Moreover, over time, pressure began to be put on other countries, threatening to be disconnected from SWIFT.
But our country was ready for such a course of events. After all, I already had the relevant experience. Thus, in 2012, Iran, which found itself under Western sanctions, was left without access to the system, and in 2017 — DPRK.
The idea of creating a similar system appeared in Russia back in 2014, against the backdrop of the first wave of sanctions and the disconnection of some Russian banks from SWIFT. This is how the Financial Message Transmission System (SPFS) of the Central Bank of the Russian Federation appeared, which does not depend on international conditions and allows banking organizations to conduct all financial transactions in Russia without any restrictions. 557 banks and companies are connected to SPFS, including 159 non-residents from 20 countries. The system is used, in particular, by banks in China, Belarus, Armenia, Tajikistan and Kazakhstan.
“It is difficult to accurately predict whether sanctions against the SPFS will be introduced, but discussions of this issue within the G7 and the European Union indicate a high probability of their adoption. This depends on political decisions and current geopolitical relations. The main factor will be the perception of a threat from Russia and the need to curb its economic activity,” — says Oleg Kalmanovich, chief analyst at Neomarkets.
According to him, the introduction of sanctions against SPFS could significantly complicate international financial transactions for Russia and its partners using this system.
“This will certainly put pressure on financial institutions in countries cooperating with Russia, such as Belarus, Armenia, China and Kazakhstan. They will be forced to look for alternative ways to make payments, which may lead to increased costs and delays in settlements,” — the expert believes.
At the same time, according to BitRiver Communications Director, economist Andrei Loboda, nothing new is happening in the West’s sanctions threats against Russia. The financial structures of unfriendly countries will continue to shape the agenda in the interests of preserving the hegemony of the dollar and the euro.
«It was not possible to put pressure on Russia and is unlikely to succeed in the case of the accelerated development of a digital alternative to SWIFT using blockchain technology. Such a system under the patronage of BRICS+ will actually nullify sanctions initiatives and act as a catalyst for dividing the world into several currency zones, bringing to an end the era of the dominance of the American dollar, — the interlocutor of “MK” emphasizes. — Russia has something to answer: transactions outside banking channels are already widely used, the country holds a strong second place in Bitcoin mining. Russian banks disconnected from the SWIFT system are seeing new records in operational work and profits.”
Andrey Loboda is convinced that the West will intensify the information field to the maximum in this situation. At the same time, theoretically, any blockchain platform for a digital system of international payments can replace SWIFT today.