All technical systems are finally ready for SWIFT in Russia. However, government officials are not sure it will be too relevant anymore, considering the evolved financial landscape, which includes crypto alternatives to SWIF.
According to a report in Russia’s official news agency, TASS, every system was now in place to enable the country to reconnect to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) if necessary.
SWIFT Uses Backward Technology
However, according to Anatoly Aksakov, head of the State Duma Committee on Financial Markets, the emergence of digital technologies like the crypto alternative to SWIFT will lead to the settlement system being built differently, meaning that the SWIFT program could have finally arrived too little, too late. According to Aksakov:
“We believe that [connection to] SWIFT is not a problem; all our systems are ready. The main thing is that they want it. Do we need it? It may be beneficial, but alternative systems should be developed. From my point of view, SWIFT is dying; it is already a backward technology.”
SWIFT Must Evolve or Become Obsolete
According to officials, it would become obsolete unless the SWIFT in Russia program evolved. He further stated that:
“Either SWIFT will be transformed into a kind of information system that considers mutual settlements, or SWIFT will disappear.”
The expulsion of Russia from SWIFT was among the economic sanctions placed on the country following its invasion of Ukraine in 2022. The ban also called the “nuclear option,” ensured that Russian banks could not access the SWIFT financial system, denying liquidity in the form of major currencies involved in global trade, such as dollars, euros, or yen. The threat to remove Russia from SWIFT was already in place from as early as 2014 when the country annexed Crimea. Russia looked for alternatives to the SWIFT financial system to counter future expulsion.
The de-dollarization Agenda
The potential reintroduction of SWIFT in Russia comes when the two leading members of BRICS, India, and Russia, seemingly dumped the US dollar and reportedly settled trade worth over $64.5 billion in 2024 using local currencies instead of the green buck. Reports indicate that the value of Indian goods to Russia surged by over 23% in 2024, making the country Russia’s leading trading partner, with both countries being at the forefront of the de-dollarization Agenda. Commenting on the development, the Russian ambassador to India, Denis Alipov, said:
“Mutual payments in national currencies are stable. As of today, national currencies account for around 90% of direct payments between Russia and India […] Russian exports reached $60 billion (up by 7.7%), while supplies of Indian goods rose to $4.5 billion (up by 23.3%).”
Conclusion
As Moscow weighs the impact of reintroducing SWIFT in Russia, it comes at a time when countries within the BRICS economic block actively promote trade in national currencies and avoid the US dollar and the related financial networks.
At the same time, the crypto alternative to SWIFT, using systems like Ripple to bypass intermediary banks, offers a streamlined process that reduces both time and fees. The efficiency of XRP has already attracted numerous financial institutions looking for a modern alternative to SWIFT’s slower, more expensive transfers, and governments are soon joining the race.
Frequently Asked Questions (FAQs)
Why was Russia banned from SWIFT?
The ban against some Russian banks is one of several international sanctions against the Russian regime as a result of its invasion of Ukraine.
What does Russia use in the place of SWIFT?
The country uses SPFS, the System for Transfer of Financial Messages, which is the Russian equivalent of the SWIFT financial transfer system developed by the Central Bank of Russia.
Can crypto be an alternative to SWIFT?
Yes, cryptocurrencies are among other systems that are replacing SWIFT. The question might be more about what countries will be willing to transact with Russia using the crypto alternative to SWIFT system.
Does Swift support crypto?
Recent developments indicate that SWIFT could help prevent fraud in cross-border payments through advanced AI and federated learning technologies.
References
Appendix Glossary to Key Terms
SWIFT: Swift is a network that enables secure communication and transfers between banks worldwide.
BRICS: An acronym for Brazil, Russia, India, China, and South Africa. It’s the name of an intergovernmental organization that aims to increase economic and geopolitical cooperation among its member countries.
Crypto: Any form of currency that exists digitally or virtually and uses cryptography to secure funds.
Ripple: Ripple is a digital payment network and cryptocurrency platform that uses the XRP cryptocurrency.
XRP: XRP is a digital asset that crypto alternative to SWIFT used on the XRP Ledger, a public blockchain.
