Russian-made financial messaging system is an alternative to SWIFT

Russian-made financial messaging system is an alternative to SWIFT

 This then attracted as many as 70 financial institutions from 12 countries of the world to join. This was conveyed by the Director of the Central Bank of Russia Elvira Nabiullina on Thursday (30/6/2022) as quoted by Reuters. A number of major Russian banks have been cut off from the SWIFT network. It is a messaging system that underpins global financial transactions as part of Western sanctions against Moscow for sending troops to Ukraine since February 24, 2022. Elvira Nabiullina said the Russian Central Bank deliberately did not announce the names of financial institutions that joined Moscow's messaging system for fear of secondary sanctions. 

As many as 25 foreign financial institutions have become members of the financial messaging system created by the Central Bank of Russia Financial Message Transfer System (SPFS) by April 2022. After being cut off from the SWIFT network, the Russian Government is currently helping its financial sector to overcome Western sanctions. Meanwhile, there has been an interesting phenomenon since the launch of Russia's special military operation in Ukraine, namely an increase in trade in the Chinese yuan and the Russian ruble by more than 1,000%, reports Bloomberg. To be precise it rose to 1067% in monthly trading volume since late February. 

China's trade with Russia rose 12% in March, faster than trade with the rest of the world. Russian imports from China declined, but trade in the other direction increased, possibly reflecting higher energy prices. Russia said it expects trade with China to reach $200 billion by 2024, up more than last year's about $150 billion. So far, tough US and Western sanctions against Russia and strict capital controls imposed by Moscow have caused the dollar to fall sharply against the ruble. Bloomberg reported that trading volume in the dollar-ruble pair fell to its lowest level in a decade. 

As is known, since the end of World War II, the US dollar has started to play the role of being the world's reserve currency where all central banks in the world are required to keep the dollar currency as state reserves. In addition, the countries of the world have to pay for their goods, commodities, assets and debts also in dollars. It was recorded that at the end of 2019, US$ 6.7 trillion was spread across central banks around the world, so it is not surprising that the US has had high pressure on other countries. But slowly but surely, the yuan and the ruble began to become an alternative against the hegemony of the dollar and euro. 

Many countries are now starting to save their foreign exchange reserves with the yuan which is considered safer. Even so, the yuan still lags far behind in international payments.
The US dollar transaction has indeed remained stable for two decades, reaching 88 percent in 2019. It was only in 2020, when the crisis caused by Covid-19 propaganda occurred – the US budget deficit increased so that the dollar as a reserve currency began to be abandoned around the world. As a result, for the first time since 1997, the dollar as the world's reserve currency fell sharply to below 60% in 2020.

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