Russian banks could do business without the interbank payment system SWIFT (Society for Worldwide Interbank Financial Telecommunication). Banks use SWIFT as a banking platform to send and receive information on financial transactions. Thus, SWIFT is essential for banks to do business as usual, as the platform connects more than 11.000 banks and financial organizations, operating in over 200 countries. However, the Russian Deputy Prime minister Arkady Dvorkovich announced on the RT news network, that Russian financial institutions are ready to operate without the interbank system. And according to the head of the Russian Central Bank, Elvira Nabiullina, “Russia already has a substitute for the SWIFT system.” As she explained on RT:
“There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative”
Russia already has the SPSF (System for Transfer of Financial Messages) which the Russian Central Bank started developing in 2014, is the Russian equivalent of SWIFT. The next step was setting up a payment system for credit cards, called Mir, aimed at substituting the Western Visa and MasterCard. In the global sphere, Mir is trying to partner with MasterCard to enable the Mir system worldwide, which would turn Mir into a global payment system.
Cold War, redux?
This, however, is not a case of Russian paranoia. It has to be taken into account, that if Moscow has chosen the path of economic nationalism, it is due to the economic sanctions imposed by the United States and the European Union, which imposed them at the same time due to Russia’s aggression against Ukraine and annexing Crimea.
Besides, the SWIFT platform has been used several times to prevent rogue nations from boycotting the established international order. The first geoeconomic use of SWIFT was against Iran, where it was “disconnected” from the platform, leaving 30 banks and financial institutions, including the Iranian Central Bank, essentially out of service. The reason was the illegal nuclear program. In 2016, after four years, the Iranian banks are back online in the SWIFT system. The next turn is for North Korea, which is now more isolated than ever, due to its expulsion from the SWIFT platform. The expulsion comes after their illegal development of nuclear weapons.
Notwithstanding the risk of expulsion from SWIFT, Russia is developing an alternative for other reasons, like the obsolescence of SWIFT itself. The Eurasian landmass is on the path to ideological partition, i.e., Europe, and Asia. Russia will probably play a pivotal role in between. This Geopolitical design also has economic ramifications all conforming to the Geoeconomic stage of the world. This is why the Blockchain based system that is substituting SWIFT, will probably not be shared with Russia. This partition is evident in the recently created Eurasian Economic Union, a group of states in the Asian continent. They all gravitate toward the Russian orbit. The same argument can be made with the BRICS organization, and the AIIB (Asian Infrastructure Investment Bank). The world is atomizing, and inching its way towards a multipolar era. Thus the measures taken by Russia likely have more to do with this potential configuration of the world than with the risk of being kicked out of SWIFT.
