With threats of further anti Russia sanctions blowing about across the American political landscape, Russia has been hard at work at both neutralizing the effects of existing sanctions as well as insulating itself against further sanctions.
Those efforts include reducing Russia’s utter economic dependence on oil, stockpiling gold, and creating its own alternative to the SWIFT banking system for domestic transfers, among others.
Russia has managed to develop a national system for money transfers that could protect its banking from the possible cut off from SWIFT transfer services in case of tougher US penalties, the central bank chief said at SPIEF.
“There are risks in using the global financial networks, the global financial system, of which Russia is a part,” the Central Bank of Russia’s governor, Elvira Nabiullina, said at the St. Petersburg International Economic Forum (SPIEF).
“Therefore, since back in 2014, we have been developing our own systems, including a payments system. Inside Russia we have created a system for transferring financial data, which is similar to SWIFT.”
Society for Worldwide Interbank Financial Telecommunication (SWIFT), is the financial network that provides high-value cross-border transfers for its members across the world. The Belgium-based cooperative supports most interbank messages, connecting over 11,000 financial institutions in more than 200 countries and territories.
The probable cut off from SWIFT entered Russia’s political agenda as early as in 2014. Back then, Washington and Brussels imposed the first round of anti-Russian sanctions over the country’s alleged involvement in the Ukraine crisis and the reunification with Crimea.
Though SWIFT itself fended off the talks about the exclusion of Russia from the network, several state corporations, including Rosneft and Rostec, have pledged to use the country’s analogue of the global interbank cash transfer service.
SWIFT has a precedent of disconnecting a sanctioned state from the network. In 2012, SWIFT cut off Iran amid international penalties against the country, leaving Tehran no chance to access billions of dollars in revenue.
“This system is already operational and it allows, inside Russia, to transfer financial data,” Nabiullina said. The governor called the domestically developed network an “absolutely similar, competing system” that allows Russia to nullify risks at least inside the country.
In this way, should further international efforts, likely led by Washington, try to utilize the same punitive measure on Russia that was employed against Iran by cutting Iran off from the system, and thereby access to hundred of billions worth of its own assets, Russia would still have the means to process domestic settlements using its own system.