Russia and China can kill SWIFT

The US may lose another lever of financial management of the world
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print 27 3 2021

At first glance, it seems there's no connection between the well-known words of Russian President Vladimir Putin "if a fight is inevitable, you have to strike first", and China's introduction of sanctions against 10 parliamentarians, scientists and four organisations from the European Union in response to sanctions for violating rights in Xinjiang. But this is if you look inattentively.

While in reality, the process of converting quantity into quality has begun. Russia and China have clearly outgrown their current status in the global world, and the United States definitely no longer corresponds to the declared by themselves category of "over".

Speaking about how much bigger price the Kremlin, in his opinion, will now have to pay for aggressive interference in the internal democratic process in the United States, Joe Biden and the forces behind him, obviously, did not take into account that not only America is able to play these games. Moreover, its ability to rule the world in itself is very vulnerable, because it holds on the habit of using the dollar as a basic means of payment.

Given the meagre nature of mutual trade, the US's ability to exert sanctions on Russia is not only limited, but has actually been completely exhausted by now. What inevitably predicts the attempts of the American establishment to use the basic international financial mechanisms for pressure, on the grounds that they are controlled by the monetary authorities of America.

The press secretary of the Russian President Dmitry Peskov in this regard directly stated that it is impossible to exclude the threat of disconnecting Russia from the SWIFT interbank payment system, since the actions of Russian opponents are already unpredictable. This situation obliges us to be on our guard.

This means two things. Firstly, that the Russian leadership is aware of this threat. Secondly, that the awareness of it came long before today. Consequently, the preparation of countermeasures to stop the threat began ahead of time.

Already in 2014, the Bank of Russia presented its own analogue of SWIFT – a system for transmitting financial messages. As of January 1, 2020, 391 participants worked in the system, and 12.9 million financial messages were conducted in it during the year.

And in February 2021, during the conference of the Association of Russian Banks, First Deputy Chairman of the Bank of Russia Olga Skorobogatova said that the Russian equivalent of SWIFT was widely used in 23 countries, including Armenia, Belarus, Kazakhstan, Kyrgyzstan, Germany and Switzerland. More than 11,000 large financial organisations from all over the world operate in it.

As Skorobogatova noted, "we have already reached about 21% of the domestic SWIFT traffic, and the figures are growing year by year.”

In other words, this means that the disconnection from SWIFT in Russia is already actually happening, so to speak, in a natural way. In the form of its progressive replacement by the SPFS mechanism.

The statement made by Foreign Minister Sergey Lavrov addressed to the Chinese media, saying that the risks of the US sanctions should be reduced by switching to settlements in national or alternative to the dollar currencies, and by avoiding the use of payment systems controlled by the West, is a convincing confirmation of this.

There is no official response from Beijing to the Russian proposal yet. But given how funny the US-China summit talks began in Alaska, there is every reason to believe that Lavrov's words were heard and understood correctly in China.

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