Russia's alternative to SWIFT spreading at record pace, Russia's central

Moscow: In 2014, Russia introduced an independent payment system as an alternative to SWIFT, which is widely used for international banking transactions. Officials of the Central Bank of Russia have claimed that their system, known as SPFS, is getting an encouraging response globally. Alla Bakina said that the total number of enterprises connected to this system had reached 400, including over 100 from 12 countries. Bakina is the head of Russia’s National Payments System Department.

SPFS seems to be quickly expanding this year. In the first six months of 2022, 50 overseas enterprises have been linked to this system. The total number of enterprises linked to SPFS has increased to 440, including 100 enterprises in 12 countries. Alla Bakina explained that the number of enterprises added in the last six months is more than the total enterprises added in the previous years.

Following Russia’s annexation of Crimea in 2014, Western countries imposed extensive sanctions on financial transactions with Russian banks. At that time, there was also a demand to remove Russia from SWIFT. It forced Russia to build a separate mechanism called SPFS to respond to Western sanctions and the threat of being banned from using SWIFT. Initially, this was limited to only Russian banks and enterprises; later, Chinese banks also participated in this system. Later, countries from Eurasian Union formed with the Russian initiative were also included.

In the wake of the Ukraine war, Russia has started to stop using financial institutions, systems and currencies influenced by Western countries, including the United States. Russia has taken the initiative to use alternatives. Countries under sanctions of the West, including the United States, are responding to this Russian alternative arrangement. Therefore, the use of local currency, along with alternative systems set up by Russia and other initiatives, is gaining acceptance.