Will Russia find replacement for SWIFT?

Will Russia find replacement for SWIFT?

Russian banks are looking for a replacement for the SWIFT bank payment system, as cutting them off from the system is possible due to the US sanctions announced by Treasury Secretary Steven Mnuchin.

US President Donald Trump supported this initiative on March 6, and the next day the representative of Alfa Bank (one of the ten largest banks in Russia) announced the end of the testing of the block system, which is likely to be seen as an alternative to SWIFT, the National Expert reported. There was a fragment of an interview with the head of Center for Innovations Research and Development at Alfa-Bank, Denis Dodon, which mentions the name of the new platform - Universa.

"The Universa platform has been tested for high speed along with other existing platforms," ​​he said. "The number of transactions approached 20 thousand during the test, which means that he platform really allows you to instantly make a large number of transactional records in the distributed registry system and allows you to "consider it as possible instrument in the field of industrial applications and for making various transactions on client's accounts," the director of the Center for Innovations Research and Development of Alfa Bank explained.

The creator of the block-chain platform Alexander Borodich confirmed that his system is being tested by the largest Russian banks. The Universa website reported that the platform is currently actively operating in Asian markets. In particular, the company signed a contract with the government of Malaysia, and also develops its activities in China.

The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking with Vestnik Kavkaza, noted that there's such a small chance of cutting Russian banks off from SWIFT. "The fact is that SWIFT is a co-operative, and some Russian banks are its co-owners. In addition, the very legal procedure of disconnection from it is very complex and takes a lot of time. As for US Treasury's statements, probably they be limited to threats, as usual," he said.

At the same time, the economist drew attention to the fact that even the low probability of cutting off from SWIFT is seriously troubling the Russian Central Bank. "Therefore, there are two alternative systems within Russia that perform the same functions as SWIFT: one was made by the Central Bank, and the other was created by the commercial company CyberPlat. Both were tested in late 2014 and can replace SWIFT for domestic payments. As for blockchain, this technology is ineffective for transferring funds within the country - it works much more slowly and requires more resources," Sergey Hestanov emphasized.

The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, in turn, spoke about the problems which can be caused by the disconnection of the Russian banking system from SWIFT. "This is a very serious stage of sanctions, which has already been applied against Iran. There will be no collapse within Russia's banking system, as the Central Bank has been preparing for such an event for many years, creating ways of interaction between banks within Russia without SWIFT - but we will face difficulties in interacting with our global partners. I will not say that we will be cut off 100%, but disconnecting from SWIFT will be a heavy blow, which will be difficult to compensate by any internal electronic systems," he warned.

"If the bank is cut off from SWIFT, it can theoretically retain the ability to make global banks transactions, but it will take the form of an individual document flow with increased attention and slowly. There is no alternative international bank payment system. In addition, banks are very conservative in applying standards of electronic document circulation - even if we now offer an ideal system, it will be implemented for 5-10 years," Alexander Abramov concluded.