Russia Creates Its Own Payment System
ALMOST 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogue of SWIFT, an international banking network.
The new service, will allow Russian banks to communicate seamlessly through the Central Bank of Russia. It should be noted that Russia’s Central Bank initiated the development of the country’s own messaging system in response to repeated threats voiced by Moscow’s Western partners to disconnect Russia from SWIFT.
SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based international organization that provides services and a standardized environment for global banking communicating that allows financial institutions to send and receive messages about their transactions.
Joining the global interbank system in 1989, Russia has become one of the most active users of SWIFT globally, sending hundreds of thousands of messages per day. In general, SWIFT provides a secure communication network for more than ten thousands of financial institutions around the world, approving transactions of trillions of US dollars.
Earlier this month Russian Deputy Prime Minister Igor Shuvalov expressed confidence that Russia would not be disconnected from SWIFT. In her turn, Russian Central Bank First Deputy Chair Ksenia Yudaeva called upon Russian civilians and financial institutions not to dramatize the current situation.
Russian experts point to the fact that Western businesses would face severe losses if they expelled Russia from the international SWIFT system. On the other hand, the alternative system launched by Russia might reduce the negative impacts caused by measures imposed by the West, including possible disconnection from SWIFT, and diminish Western financial dominance over Russia. Source
Additional commentary on this story via One World of Nations, by Ian Welsh:
Much of the West’s power comes from our financial hegemony. Our ability to cut people off from loans, payments and so on. Since this new system is Russian only, it isn’t, right now, that big a deal.
But start connecting other countries to it, say China, Iran, India and so on, and it becomes a way of breaking financial blockades. Include some calculable financial law (less of a challenge than it used to be as New York and London courts make increasingly punitive decisions), and start lending in Yuan (with which one can buy much of what one needs in the world, since the Chinese make so much of it), and you have a fully credible financial system.
The key is to get one major manufacturing country in. Most of the nations the West is punishing these days, financially, are oligarchies (Venezuela, Iran, Argentina). They need the ability to buy manufactured goods. The obvious country is China. If China agrees to go in, Western financial hegemony is broken. Japan could work; India could almost work, and Japan or India have a lot more to gain from it than it might seem (as we watch the Japanese economy implode.)
Even before then there are deals which can be cut. Say Greece wants to buy Russian oil. Russia can lend them Rubles, then use those rubles to buy Russian oil, and in exchange Russia gets use of Greek ships and ports and access to the EU.
This is, then, in one sense, not a big deal. As long as its only Russia, it’s a defensive move of somewhat limited utility.
But if it expands beyond Russia, well then, it’s earth-shaking.
Get out the popcorn and watch it develop. Source