Russia No Longer Disclosing Names Of Organizations That Use SWIFT Alternative

April 22, 2022 2:29 pm

Since the Russia-Ukraine conflict, the central bank of Russia has recently announced that it will no longer disclose the names of the organizations that use its alternative to the SWIFT payment system.

As part of Western sanctions against Russia, many of the Russian banks and institutions had been blocked out of the SWIFT system anyways.

Therefore, it is expected that more and more organizations within the country will start utilizing alternative payment systems such as SPFS as well as some blockchain alternatives.

Banks of other nations are also reportedly using SPFS in greater numbers now which indicates that the demand is rising to levels that have not previously been seen before the conflict.

Yahoo reports:

Most Russian banks, as well as 52 foreign organizations from 12 countries, have access to SPFS, Russian Central Bank governor Elvira Nabiullina said on Monday, per Reuters.

Banks from the Germany, Switzerland, France, Japan, Sweden, Turkey, and Cuba were among those connected to SPFS, according to a March report from Coface, a French credit insurer.

“Until there was such a threat of being cut off from SWIFT, foreign partners weren’t in much of a rush to join, but now we expect their readiness to be greater,” Nabiullina said of SPFS, according to Bloomberg.

The Indian government was considering a Russian proposal to use the SPFS for payments in rubles, Bloomberg reported in March.

India has been buying cargoes of cheap Russian oil amid international sanctions and boycotts of products from the energy powerhouse. Russian oil accounted for just 2% of India’s total imports in 2021.

It is not only institutions that actively seek financial alternatives during times of conflicts, but also the people of the nations themselves.

Many are actively exploring a variety of different ways to preserve their financial assets and payment networks that can be utilized without the risk of the governments shutting them down.

Russia’s parliament has also recently passed a draft bill that would prevent Russian banks from sharing their banking secrets for the purpose of protecting the country’s financial sector.

This means keep most of the financial transaction records as private as possible and keeping the names of organizations that use alternative financial systems protected.

As a result, many are speculating that this will lead to the future rise of many other prominent payment networks that will be used for cross border transactions which includes SPFS or XRP which has been referred to as SWIFT 2.0.

Essentially, there will likely be multiple prominent players in the global financial network from now on instead of just SWIFT.

Reuters.com reports:

The statement said lawmakers had approved the bill in a third and final reading.

To enter into force, it still needs to be approved by the upper house of parliament and signed by President Vladimir Putin, steps which are seen as a formality.

The central bank has said it would no longer publish the names of banks connected to Moscow’s alternative to the SWIFT payments network and has temporarily stopped publishing data on foreign trade on a monthly basis, as Russia responds to crippling sanctions over the Ukraine crisis.

It is still early in the game right now, but investors are already speculating who the new players will be that will challenge the existing SWIFT monopoly.

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