Izvestia was informed by Central Bank sources that Central Bank of Russia and the government will continue to develop alternative to the SWIFT international settlement system. That decision was made irrespectively of the official announcement of SWIFT representatives that their company is not going to block Russia from its services.
Previously European Parliament called on EU and its constituting countries not to cancel their sanctions on Russia, unless Moscow fulfills its conditions regarding de-escalation of Ukraine crisis. Moreover, members of European Parliament claimed that one must be ready for new restrictive measures – including exclusion of Russia from the SWIFT system. The US representatives also insisted on disconnecting Russia from SWIFT.
“SWIFT and its shareholders were appealed to disconnect individual entities and whole countries from their system - mainly Russia and Israel”, — said the statement that appeared yesterday.
“Any decision to impose sanctions on countries or individual entities rests solely with the competent government bodies – remarks the company. – SWIFT will not yield to individual demands and pressure to disconnect financial institutions from its system.”
Regardless of this statement Russian government and Central Bank of Russia intend to continue development of the alternative system of interbank settlement.
— Legislation work is in progress. Once corresponding amendments are approved, Central Bank of Russia will take practical steps towards development of its own system, – says Central Bank source.
In late August regulatory authority and an array of ministries drafted a law regarding creation of analogue to SWIFT in Russia.
— We have prepared and tested the draft law with Central Bank of Russia, - claimed Alexey Moiseev, deputy of the finance minister. He remarked that the draft law will be greenlit when it is clear that Central Bank is ready for a full transition to a solely domestic processing in terms of technology.
Banks believe development of alternative to SWIFT is doable, at least for internal payments.
— Creation of the SWIFT analogue is feasible and the Bank of Russia has already taken that into consideration. Modern technologies and standards allow Russia to set up a SWIFT analogue, at least for domestic transactions. Currently there are discussions underway regarding establishment of the analogue on the basis of current electronic settlement systems; financial messaging channels of the Bank of Russia may also come into play. Banks’ readiness to switch to the new system depends both on actual implementation of the project, and on the need for data exchange. For instance, as of now banks can bypass the SWIFT-block issue by using bank-client (internet-client) by entering into bilateral banking agreements. One other option – inconvenient and obsolete as it may be, but still ensuring information exchange, is TELEX, – goes over options Olga Kurasova, head of banking transactions maintenance department of the bank Trust.
Yuri Amvrosiev, Binbank’s head of the international business and financial institutions department, is positive that it is crucial to set up an analogue for domestic settlements using standards, requirements and base of SWIFT.
— That will simplify and increase speed of domestic payments and it will also partly make domestic payment system more secure. It will be much harder and close to impossible to localize SWIFT itself within Russia. There is neither capability, nor need to create an analogue of international settlement – this product will be dead long before it hits the market, because it is truly impossible to make the whole world switch to that system – he is convinced.
According to Andrey Emelin, chairman of the National Council of Financial Market, SWIFT’s decision to keep Russia connected is definitely good news, since all Russian banks operate through it. However, according to him, it is still necessary to set up a local system of interbank settlements with participation of Central Bank of Russia and SWIFT, as was done by India, for instance.
— We need an internal Russian loop of SWIFT, - says Emelin. – It can be created on the basis of the payment system of the Bank of Russia by bringing it up to compliance with SWIFT requirements technology-wise. It will also be necessary to connect the existing data processing center of the Central Bank or to create a new one for that purpose.
According to Emelin total replacement of SWIFT by a national system is out of the question – it took decades for the international system to become what it is today and it is an impossible task to replace it overnight.
— We need localization of SWIFT while saving the message format acceptable by SWIFT, — says Emelin.
Head of National Council of the Financial Market also points out that creation of the new system will imply double standards, which will cost banks an arm and a leg in terms of material, technological and operating nature, because their messages will have to comply with requirements and standards of the two systems simultaneously.
— From perspective of international settlements it is impossible to create a SWIFT analogue by efforts of just one country. It would be theoretically feasible, should other countries come into play, but building of such a system is costly all around, — says Alexander Levkovsky, First Deputy Chief Executive of the SMP Bank. — Concerning domestic transactions in Russia, settlements in ruble will exist no matter what, but currently SWIFT’s functionality is way richer that that of the system of the Bank of Russia. Mind you, the latter could be expanded, by such options as, say, acceptance of letter of credit or ability to send secure messages in a free format. Implementation of that sounds like a much less complex thing than, say, building of the National System of Payment Cards.