Russia will continue to set up its own interbank settlement system
Members of the National Payment Council propose to set up SWIFT substitute based on the Central Bank of Russia
Threats to block Russian banks from the system of interbank transfers SWIFT have been circulating for weeks. Last week European Parliament proposed EU countries to consider excluding Russia from the system.
Politicians believe that even a partial disconnection from SWIFT may have very dramatic consequences for Russia’s economy.
Ministry of Finance of the Russian Federation intends to make international system of financial message exchange SWIFT set up a subsidiary in Russia. Experts believe that developments may follow the scenario of Visa and MasterCard. According to RBC, largest banks of Russia have already started testing their systems of financial information exchange not waiting for the decision of authorities.
Cutting Russia off SWIFT is an act of aggression against Russia, response to which must be as tough as possible, said VTB head Andrey Kostin at International Investment Forum held in Sochi.
On Thursday, September 18, during the plenary session members of the European Parliament adopted a resolution on excluding Russia from the SWIFT system. Such resolutions are not mandatory; the final decision rests with the union countries and European Commission.
European Parliament calls on EU countries to consider excluding Russia from the SWIFT system, reads the approved resolution of the European Parliament plenary session.
Former Minister of Finance Alexei Kudrin predicts zero growth of Russian economy in the years to come due to the low investment inflow. He believes structural issues had been obvious well before the Ukraine crisis and sanctions on Russia.
“National Payment Council” association suggests we switch from SWIFT to the system of the Bank of Russia and of the National Settlement Depositary of Russia. That offer was sent by the association to Georgy Luntovsky, senior vice president of the Central Bank of Russia (RBC has the letter). In the letter the association points out that it has discussed the issue with the banks and opinions of the market players have divided. In general, market players realize that it wouldn’t hurt to have alternative channels of information transfer in order to exchange financial messages within the scope of the Russian National Payment System (NPS). And dependence of depositary institutions on SWIFT within Russia isn’t deemed to be all that crucial, says the letter.
SWIFT is a Society for Worldwide Interbank Financial Telecommunication. Various mass media had previously presumed block of access of Russia to SWIFT within the scope of the new European sanctions, however, later on Reuters reported that European Commission did not discuss such a measure.